The first half of this year has, without doubt belonged to video-on-demand. The BBC's iPlayer, Channel 4's 4OD, ITV's on demand service and other such services have revolutionised the way we consume programming. People no longer have to wait for that repeat of 'Freaky Eaters' that’s on at half past three in the morning, instead they now have an abundance of content across all genres to indulge themselves. With new users jumping on the VOD bandwagon every day we take a look at what the big fuss is about.

What VOD is available?

The phenomenal success of the BBC iPlayer really sums up what online is all about; free content at the consumer’s disposal. Recent figures reveal that 75 million sessions have been logged from January to the end of April to stream or download content, with one Sunday in May peaking at 900,000 requests on the iPlayer. The simplicity of the user interface plays a big part in its mass appeal - its not hard to find programmes, content spans all genres and ages, ranging from 'Blue Peter' to 'Last Man Standing'. The iPlayer has increased traffic to bbc.co.uk by 29%, the only downside is that it is publicly funded so advertisers have to miss out on the most perfect of opportunities.

On the other hand Channel 4’s own service 4OD does offer advertisers the opportunity to get in front of consumers with pre-roll advertising whilst they log on to watch popular shows such as Skins and Shameless. 4OD has been in operation since December 2006 and has received over 100 million streams/downloads in that time, with a 110% increase in regular users this year alone. It might not yet have reached the staggering heights of the iPlayer but it has built up a devoted audience that use the service regularly.

How people are using it?

Although many video based sites were around before Youtube, it was the true instigator for hundreds of video sites to become more popular for example Veoh, Blinkx, Current and Metacafe. These bite-size videos are easy to consume, ideally fitting in with modern, busy lifestyles. People can go online, get what they want, when they want. VOD has filled the void of television programming on the internet, people can mold their viewing habits almost entirely around their lifestyles. A breakdown of the demographics who consume content via the iPlayer show 37% are 16 to 34, 43% spread between 35’s to 54’s, and 21% over 55.

What this means for advertisers?

Our recent IAB/PwC Adspend study for 2007 revealed that banner, skyscraper and embedded rich media including video advertising witnessed a 45% growth to £592 million. Catch up TV (VOD) has made the internet another port of call breaking the barrier between video entertainment and the internet as a communications or shopping tool. More online familiarity means more time online and more openings for advertisers. Advertising alongside video offers greater engagement, below is an outline of the advertising formats that can surround video on demand content:

• Pre-roll advertising are adverts that precede a programme and are available with 4OD and ITV VOD content. Research undertaken by Piper Jaffray showed that 39% of participants would welcome ads before online video, 31% said they maybe would, and 30% would not want to watch pre-rolls. This is mainly due the lengths of the ads, at present they tend to be 30 second ads taken directly from TV spots. Ads no longer than 15 seconds would make the consumer more willing to engage and watch, instead of turning their attention elsewhere.

• Mid-roll advertising has been around since the early days of TV and people are used to their viewing being interrupted by a break for advertising. ITV make use of this method, however online people do not expect as much disruption and prefer uninterrupted content. A Forrester study found that 80% of respondents would be annoyed by mid roll ads, along with another 75% saying they would just ignore advertising of this manner.

• Interstitial advertising is an advert that sits in between two programmes on such sites as Reuters, Joost, ITV and 4OD.

• Overlay advertising are positioned over the bottom of video content offering the user the opportunity to opt in by clicking or leaving it to just disappear after about 5 to 10 seconds. This kind of advertising is far more likely to be approved by the viewer as it gives them the choice to easily engage with the brand or to just ignore it.

The cost of online video advertising varies depending on the publisher; the better the content and offering, the higher the premium. Along with measurement tools, user interaction is completely measurable. The IAB Video Advertising Council is in the process of putting together a set of standards for advertisers to follow including the following: lengths of ads around short and long play content, the size of video window, and the size of bit rate of the video file.

• Advertisers can find case studies & more helpful information here about VOD

Does all this fun come at cost to the rest of the internet?

Out in the so called ‘sticks’, otherwise known as the countryside – internet in a lot of places is still accessed by relatively slow internet connections. Broadband ISP’s have reported that the numbers flocking to video-on-demand services have placed a strain on the network. In fact there is a danger that network lines soon simply will not be able to cope with all the video content being consumed online.

There have been calls from ISP’s for sites that supply video to pay for upgrades to the infrastructure. Ashley Highfield, Ex head of future media and technology at the BBC and now CEO of Kangaroo said the BBC iPlayer is having a 3-5% impact on the network. Indecision looms over what will be the eventual outcome, but for the growth of online and all its glorious free video, we are dependent on the improvement of the infrastructure - we can only dream of the 90MB per second broadband that Japan enjoys.

The Future of video on demand

Something that will be available in the near future is Kangaroo. A working title for a VOD aggregating website (Like Blinkx) that will bring together the BBC’s, Channel 4’s and ITV’s content into one place, it’s hoped that more content providers will follow. Full details of the service are yet to be released but it’s set to initially launch with 10,000 hours of content with more to follow, the BBC have pledged to make available their archive of programmes such as all the oldies that everyone still loves to watch.

It’s not yet known whether consumers will have to pay for content but it is known that it will rely on advertising around the site, Errol Barran of channel 4 said Kangaroo has “planned to include a registration process so advertising could be targeted by area, age and demographic, and to monitor how people are watching’. This opens fantastic pathways for advertisers to directly engage with their core audiences.

ITV and Channel 4 are planning to sell advertising space around their own content; they are also planning to pitch for BBC’s space but there are still a number of factors preventing BBC’s full integration. The Office of Fair Trading (OFT) are investigating the relationship between Kangaroo being a commercial enterprise whereas the iPlayer being publicly funded, also the potential revenue loss for other VOD providers such as Virgin Media, BSkyB, and Orange Digital TV (Soon to be launched).

The BBC Trust is also yet to fully support the project. Lost revenue from DVD sales could be a factor, and content owned by independent parties could hold up the launch - it could all mean that BBC’s content is listed on Kangaroo with links redirecting people back to the iPlayer homepage. Let’s just hope these problems are easily overcome as people have said, Kangaroo has the potential to; “do for broadband what Freeview did for digital TV." (Guardian)

The BBC iPlayer and all the available VOD services have clearly demonstrated that people will use the internet to consume video of varying kinds and durations. Although there are still many obstacles to overcome, highlights such as Kangaroo will give advertisers an unrivaled source to engage directly with the people they have always really wanted to reach. 2008-2009 is going to be a very exciting period for video-on-demand.