When demand for online video advertising began to skyrocket about a year ago, companies responded by putting their 30-second television commercials on the Web. Bad idea. Consumers tuned out the pricey spots, forcing advertisers and Internet sites to cut the time of their commercials in half. Now, some are even shorter. "There are more 15-second ads than there were a year ago," says Elicia Brand-Leudemann, national director of in-stream video networks for Advertising.com, an advertising network owned by Time Warner's ( TWX) AOL. "The push toward the shorter commercial sports is coming from the publishers. It's because they are getting an increased annoyance rate from their users." Keeping users interested in online video is critical for companies like Yahoo! ( YHOO) and Microsoft ( MSFT) as more advertising dollars flow online from traditional media. Advertisers like video content because it keeps users online longer than they would be otherwise, and are willing to pay top dollar to advertise on it. Online video ads are a potential bright spot for both Yahoo! and Microsoft. Shares of Yahoo! are down almost 25% this year, amid growing investor concerns about competition from Google ( GOOG). Microsoft, whose shares have fallen 2%, is boosting spending to try to gain ground against Google as well. Yahoo!, the Web's most visited site, is working with marketers to figure out what types of video ads are most effective, the company says. Like other sites, Yahoo! has been increasing the amount of video content it offers in response to demand from advertisers. Plus, these sites, and Google, are facing competition from upstart video site
YouTube. Many advertisers are finding that consumers will tolerate advertisements if they are placed before content they think is worth the wait. Still, it's more challenging for advertisers, who sometimes wait for months to get ads on popular sites, to get their messages across to consumers in short time increments. "The Web is evolving the way people consume both content and advertising -- we have definitely seen positive results when running shorter ads that are tailored to the online viewing experience," says Rob Bennett, general manager of video and entertainment services for MSN, in an email statement.