As anyone with a broadband connection and an internet browser can tell you, video is now a standard feature on most web sites. (In our 2008 webtrack of leading European sites, we found that 96 percent offered video content — up from 88 percent in 2007.) But many publishers still aren’t making any effort to monetize their video content. According to that webtrack, just over one-half of European sites with video content accept in-stream advertising.

Now don’t get me wrong: half is good progress. In 2007, barely one-quarter of sites with video content were accepting in-stream ads. But it’s still maddening for me to see so many sites spending money on producing or acquiring, and then promoting and serving video content, without making any real effort to monetize that traffic.

A number of holdout publishers have told me they think that in-stream ads are too annoying, and that they’ll lose a huge number of users if they run in-stream ads. But the data doesn’t bear this out: I haven’t spoken to any publisher who lost a significant number of video visitors as a result of introducing in-stream advertising — and even those publishers who report losing a handful of visitors because of pre-roll ads say their traffic bounced back within a month or so. Further, we’ve got years of survey data which tells us that although users don’t particularly like in-stream ads (or any other type of online or offline advertising we’ve ever asked them about), most of them understand the quid pro quo, and are willing to accept a certain level of advertising in exchange for free video content.

I’ve spoken to dozens of industry executives about this, and collected quite a lot of data on user abandonment rates in various scenarios. And according to my calculations, if a site offers good quality video content and manages their in-stream advertising properly (limiting ad length, controlling ad frequency, eliminating ad clutter), the introduction of pre-roll ads should cost them less than five percent of their video traffic.

As a publisher, would you give up five percent of your video traffic in order to start monetizing the rest? Put another way, would you rather lose money on 100 percent of your video traffic, or make money on 95 percent of that traffic? For me, the decision is easy.

Jupiter clients can read our latest research on this topic: Video Advertising in Europe: Increasing User Acceptance of In-Stream Ads. I’d also recommend you have a look at last year’s report on how to properly manage in-stream advertising on your site: European Online Video Advertising: Best Practices Guide.