AOL Corp. made a bold move today to show it is serious about competing for the online video audience, with the acquisition of California-based Adap.tv for a total of $405 million.
On the heels of releasing its Q2 earnings, AOL announced today it is buying the firm that pairs Web video content from other providers with its own programmatic advertising platform. The purchase price was about $322 million in cash consideration and $83 million in AOL common stock.
Adap.tv is a platform that allows advertisers to bid on a commercial spot that plays in the few seconds before a user views an online video. The commercial spots can be targeted towards a specific demographic, making it more valuable for advertisers as they know exactly who will be viewing their advertisement. The whole bidding process can take place in a matter of milliseconds, from when a user first clicks on a video link, to when an advertiser places a bid, to when the platform finally serves up ads to the user.
In an interview with CNBC, Tim Armstrong, AOL’S CEO, said he expected the acquisition would “essentially double AOL’s revenue in the video space and get us up to 150 million unique visitors in video.” The deal is expected to close by September.
Seeing a major brand like AOL betting heavily on online video is unsurprising, says Ezra Fishman, marketing director at Wistia Inc. Based in Massachusetts, Wistia provides hosting for businesses looking to create online videos and measure user engagement. Its deep analytics engine gives feedback to businesses on exactly where viewers stopped watching a video, or what section they skipped. They say the concept is to hone your video to resonate more clearly with the audience.
Since more and more people are moving online to consume video, it’s only natural that advertisers will need to find new ways to market to them. That’s especially true as viewers now have the power to watch videos almost anywhere, Fishman adds.
“The question is, how will advertisers respond? Because the control takes a little bit away of the advertiser’s power, because they rely on an audience that is not able to leave and skip ads,” he says. “So I think that’s the challenge of the advertisers, to figure out a way to still get in front of an audience that now has more control over the viewing experience.”
Earlier this year, comScore Inc., a digital analytics company, reported 92 per cent of Canadians using the Internet are watching videos online – and advertisers are taking notice. In a report from BrightRoll Inc. and the Interactive Advertising Bureau of Canada, released earlier this year, Canadian advertisers said they were spending 42 per cent more of their media campaign dollars on online videos, compared to last year. The number of clients requesting videos has also jumped dramatically.
With viewers flocking to online video, technology companies are exploring ways to deliver video content with other value-added services designed to drive business results – exemplified by Adap.tv’s advertising platform and Wistia’s hosting and analytics combo package.
So what’s driving this sudden rush among businesses to generate online videos? One reason is that technology has improved lately, Fishman says. For example, consumer access to bandwidth has improved, meaning it’s easier and more seamless to stream videos. It’s also now less expensive for businesses to create videos – after all, people can take high-definition videos using an iPhone, he adds.
Businesses are also realizing it’s important to tell customers their story and show the personality behind their brand, whether that be through online video or social media, he says.
“You have to do more than just have a Web site, or more than just have the most affordable service. It’s important to go one step further to build relationships with customers and with prospects, and that tends to be the driver of business,” Fishman says.
3 simple tips for online video success
“It doesn’t matter even how you do it. What matters is that you’re putting a face to the company, giving people something to relate to, that we’re actually individuals and not just an anonymous organization here to take your money.”
For small to mid-sized businesses (SMBs) interested in posting online videos, Fishman has a few tips.
- First, it’s important for people to appear in the videos. It may be uncomfortable to stand in front of the camera, but people relate best to other people, and they need to see a real person, he says.
- Businesses should also let their employees’ personalities shine through. For example, Wistia is made up of a group of “eccentric” and “quirky” individuals, Fishman says, and there’s nothing wrong with allowing customers to see who they are.
- Finally, video content should focus on teaching rather than self-promotion. A lot of Wistia’s videos have a how-to mentality, showing viewers how to create good lighting for their own videos, or explaining how they can write engaging scripts.
Ultimately, SMBs need to think about their goals in creating these videos, Fishman says.
“I think we all fall in love with the idea that video is kind of the silver bullet, and it’s going to go viral, it’s going to put us on the map. And the truth of the matter is, that just rarely happens for business,” he says, adding video is much more effective when businesses target it towards people who are already familiar with their brand.
“Instead of trying to reach the entire world, if your goal is to connect more deeply with each person who visits your website, you’re just going to be more successful.”
Watch Wistia’s how-to video explaining lighting techniques here:
