Video on demand Advertising is here. Where is the value? pre -roll or mid roll ads?

This blog was triggered when I read the excellent blog by Bruce Goerlich at Rentrak.
  Video on Demand - The Power of Pre-roll
He is spot on that the highest value individual ad is a pre-roll ad as viewership can only decline from the start of a Video on Demand session and therefore the most valuable ads are pre-rolls. However the aggregate value of the ads paints a slightly different picture. Basically much of the total revenue for a piece of content is going to come from the mid rolls

The fact of the matter is that there are only so many pre-rolls opportunities that you can expose a user to before, they will stop viewing. In reality this is between one and three x 30 second ads. At 3 you are probably going to lose viewers.

But on premium long form content that is now starting to become accessible in Over the Top environments that is not going to be financially viable. As a comparison in classic live TV in a typical one hour time period there are nearly 18 minutes of ads. That would be 36 x30 second ads!

Hulu is another excellent point of reference to see what the ad payload is. Based on entirely subjective testing ( which could mean I have too much time on my hands to watch all those Hulu episodes!!) there are  between 7 and over 20 x30 second ad break on premium long form content. ( In English that is TV episodes that you can watch on demand). Only one or two of these breaks were pre-rolls.

I will repeat! Only 1 or 2 of these ads were pre-roll ads. The ratio of pre-roll to mid -roll works out to be 2:20 or 1:10 making some guesses about the average pay load.

However the value of the pre-roll ads is not ten times the value of the mid-rolls.Actually the cost of a pre-roll ad is not even twice the cost of a mid roll.Therefore most of the value in the aggregate for a piece of content is in the mid-rolls even though the individual value of a pre-roll is higher than a mid roll ad.