Are Five-Second Ads the Future of Web Marketing?

Filed in archive Internet TV on April 27, 2006

In 2005, the market size for online video advertising was small (about $225 Million) compared to traditional television ($60 Billion in the U.S alone). Experiments by advertisers in online video ads often use repurposed 30-second ads created for television. But they don't really work.

Market intelligence firm IDC estimates that by 2010, online video advertising will reach $782 Million. Rarely am I more optimistic than the analysts, but this may be that rare case. I promise that in future postings I will try to lay out the case of why this market could be much larger.

But here let's look at an alternative to the 30-second spot. "Why not five-second video ads?" Arik Czerniak, CEO of Metacafe asks. "I would gladly put those in front of videos. But I will never put 30-second ads in front of videos. It's too much. It ruins the experience for viewers."

Still, the shift is slow-growing. While Metacafe and its competitors have begun taking ads, they live on their venture capital investments. For Metacafe, that's about $5 million to date from Benchmark Capital, Mr. Czerniak said. Also this year: Heavy.com got $10 million from Polaris Venture Partners, and YouTube scored $8 million from Sequoia Capital.

But can five-second ads ever add up to serious money? Mr. Czerniak's scenario: 150 million monthly video impressions with five-second ads at a $10 cost per thousand delivered randomly could bring in some $2.5 million a month. In his estimation, that's more than enough to qualify as successful.

Read more about Metacafe and the 5-second spot at AdAge >>