During my time at Synacor working on AT&T's news properties, I watched our average revenue per user (ARPU) metrics obsessively. We ran countless experiments, tested dozens of ad placements, and partnered with every major ad network you can name.
One pattern emerged so consistently, so dramatically, that it fundamentally shaped our product strategy:
Video ads make so much more money than static ads that it's almost embarrassing.
Not 20% more. Not even 2x more. We're talking order-of-magnitude differences that make banner ads look like a rounding error.
Let me explain why, and what it means for anyone building a content product.
The Numbers Don't Lie (But They Do Shock)
Here's the reality from the trenches of digital advertising circa 2014-2015, and these dynamics have only intensified:
Static display ads (your standard banner, rectangle, or sidebar ad):
- CPM (cost per thousand impressions): $0.50 - $3.00 for most content sites
- Click-through rates: 0.05% - 0.1% (yes, that's five to ten clicks per 10,000 impressions)
- Revenue per impression: Fractions of a penny
Video ads (pre-roll, mid-roll, or standalone video players):
- CPM: $15 - $50+ for quality inventory
- Completion rates: 70-90% for well-implemented pre-roll
- Revenue per impression: 10-20x higher than comparable display ads
When we launched video advertising in our Android news app, we saw a complete transformation of the economics. A user who watched one video ad per session was worth 15-20x more than a user who scrolled past a dozen banner ads. Users worth pennies in ad revenue became individuals worth dollars.
Why the Gap Exists
The revenue difference isn't arbitrary—it reflects fundamental differences in how these ad formats work:
1. Advertiser Demand Is Massively Skewed Toward Video
Advertisers don't just prefer video—they're desperate for it. TV advertising budgets are massive, and those budgets are increasingly shifting digital. But advertisers want TV-like experiences: sight, sound, motion, storytelling.
Video ads are where the TV money goes when it goes digital. Banner ads are where the leftover programmatic remnant inventory budget goes.
This demand imbalance creates enormous CPM premiums. Advertisers will pay $40 CPM for video inventory that engages users for 15-30 seconds. They'll pay $2 CPM for banner inventory that users have learned to completely ignore.
2. Attention Is Quantifiable (And Video Commands It)
Here's an uncomfortable truth about display ads: nobody looks at them. Not really.
Banner blindness is so complete that most users couldn't tell you what ad they just scrolled past five seconds ago. Eye-tracking studies consistently show that users have learned to completely tune out standard ad placements.
Video ads force attention. Even if users are watching with irritation (hello, pre-roll before the content they actually want), they're watching. They're hearing the message. They're processing the brand.
Advertisers pay for attention. Video reliably delivers it. Banners mostly deliver impressions that never actually reached a human brain.
3. Video Enables Storytelling
A 300x250 rectangle gives you: an image, a headline, maybe a button. You have perhaps 0.3 seconds of user attention before they scroll past.
A 15-second pre-roll video gives you: motion, sound, narrative arc, brand story, emotional connection, and a captive audience that chose to wait through your ad to get to content.
Those 15 seconds let advertisers do things that banner ads simply cannot: demonstrate products, build emotional connection, tell brand stories, create memorable moments.
The creative potential of video means premium brands are willing to pay premium rates. A luxury car brand will pay top dollar for a video ad that shows their vehicle in motion. They'll pay peanuts for a static image that gets scrolled past.
4. Completion Rates Prove Engagement
With banner ads, you pay for impressions but have no idea if anyone actually saw them. With video ads, completion rates prove engagement.
When 80% of users watch your entire 15-second pre-roll, advertisers know they got 15 seconds of attention. That's measurable, valuable, and worth paying for.
This measurability creates confidence. Advertisers know what they're getting. And they're willing to pay significantly more for that certainty.
5. The TV Money Migration
This is the elephant in the room: television advertising is a trillion-dollar market, and it's slowly shifting to digital. Where does that money go?
Not to banner ads. TV advertisers want TV-like experiences. Video is the only digital format that feels like a natural evolution of television advertising.
As TV budgets migrate digital, video inventory is where they land. This creates sustained, enormous demand that keeps video CPMs high even as overall digital inventory increases.
6. Video Drives Brand Recognition
My two kids live on YouTube, streaming, and video games. There is far less opportunity for them to memorize all of the cartoon theme songs and ad jingles I have crowding my brain as someone who grew up watching hours of broadcast TV a day. However, while watching a football game, a Liberty Mutual Insurance jingle came on. Their ads always conclude with "Liberty, Liberty, Lib-er-ty" and MY KIDS SANG ALONG.
Video allows you to create ear worms, to associate beer with fun and expensive cars with beautiful women in a way that still images just cannot hope to match. For large consumer brands, ads are creating the adjectives we use to describe their products. Jeeps are rugged and tough (when they are not in the shop -ed.), BMW is the ultimate driving machine conquering the twisties, and so on. It is extremely hard to communicate all these brand characteristics in a still 160x600 pixel skyscraper ad.
The Product Implications
Understanding this revenue gap fundamentally changes how you should think about content product design:
Every Product Decision Should Optimize for Video Inventory
When we were designing the AT&T news app, every major product decision was evaluated through the lens of: "Does this create more video ad opportunities?"
Article layouts were designed to accommodate video players. Navigation flows were optimized to increase the likelihood users would engage with video content. Push notification strategies considered which content types would lead to video views.
We weren't just building a news app—we were building a video ad delivery system that happened to also provide news.
That sounds cynical, but it's not. Users wanted quality news content. We wanted sustainable revenue. Video ads let us provide one by enabling the other.
User Experience and Revenue Aren't Always in Conflict
Here's a surprising finding: users often preferred video content over text articles, especially on mobile devices.
Short news videos (30-60 seconds) performed incredibly well. They were easier to consume while multitasking, more engaging than text, and provided the same information in less time.
So we created more video content. Which created more video ad inventory. Which generated more revenue. Which funded the acquisition and creation of more quality content.
When the ad format aligns with user preferences, everybody wins. Video was that format.
Not All Placements Are Created Equal
The specific implementation of video ads matters enormously:
Pre-roll on user-initiated video: This was our highest-value inventory. Users clicked to watch a news video, they got a 15-second ad first. CPMs: $40-60. Completion rates: 85%+.
In-feed video: Video content within the article feed with ads. CPMs: $25-40. Engagement: variable but strong.
Interstitial video: Full-screen video ads between content pieces. CPMs: $30-50. User experience: questionable. We used these sparingly.
Auto-play in-article video: Technically high CPM but often low completion rates and terrible user experience. We mostly avoided these despite the revenue temptation.
The lesson: maximize video inventory, but do it in ways that respect user intent. Pre-roll on content users actively chose to watch performed best on every metric—revenue, completion rates, and user satisfaction.
Mobile Is the Video Advertising Promised Land
Video ads on mobile devices monetize even better than desktop for several reasons:
- Full-screen real estate: On mobile, video takes over the entire screen, commanding complete attention
- Lean-back consumption: Users are more tolerant of video on mobile
- App environments: In-app video inventory commands premium CPMs compared to mobile web
- Controlled experience: Apps give you more control over the ad experience than web browsers, including notifications
The Dark Side: When Video Goes Wrong
Let me be honest about the temptations and pitfalls:
The Auto-Play Trap
When we first saw the CPMs available for video ads, the temptation was immediate: "What if we just auto-played video everywhere?"
Auto-play videos in article feeds. Video players that started as soon as you scrolled to them. Aggressive video content recommendations designed to maximize video consumption.
The CPMs were incredible. The user experience was terrible.
We learned that there's a difference between sustainable monetization and burning down user goodwill. Auto-play video—especially with auto-play audio—is one of the most hated patterns in digital media for good reason.
Users will tolerate—even prefer—video ads on content they chose to watch. They will rage-quit your app if you assault them with auto-play video they didn't ask for.
The Volume Arms Race
When video monetizes so much better than static ads, the pressure is enormous to just... make everything video.
Text articles with gratuitous video players. Photo galleries that could have been static but are now video slideshows. "Video" content that's just stock footage with text overlays.
This degrades the product. Users can tell when you're making low-value video just to create ad inventory. It erodes trust and engagement.
The solution: invest in legitimate video content that provides real value, then monetize it appropriately. Taking shortcuts burns your brand.
The AT&T Brand Safety Constraint
Remember how I mentioned that AT&T had strong concerns about content appropriateness? This constraint was even more relevant for video.
Static ads can be intrusive, but they're passive. Video ads are active, loud, and impossible to ignore. When a video ad is inappropriate, offensive, or poorly targeted, the user experience damage is much worse.
We had to be incredibly careful about:
- Which ad networks we partnered with
- What categories of video ads we'd accept
- How we handled ad targeting and frequency
- What controls users had over their ad experience
The revenue opportunity from video was enormous, but the brand risk was proportional. We couldn't just optimize for CPMs—we had to optimize for CPMs within acceptable brand safety constraints.
This meant leaving money on the table. Some ad networks offered higher CPMs but lower quality control. Some ad categories paid well but felt off-brand for AT&T.
We learned to optimize for sustainable revenue, not maximum revenue. There's a difference.
What This Means for Your Product
If you're building a content product and thinking about monetization:
1. Video Should Be Central, Not Peripheral
Don't bolt video onto a text-first product as an afterthought. Design video opportunities into the core experience from the beginning.
Think about:
- What content naturally lends itself to video format?
- Where in the user journey do video ads make sense?
- How can you create video inventory that users actually want to engage with?
2. Invest in Video Production Capabilities
Creating quality video content requires different skills and infrastructure than text or static images. But the ROI justifies the investment.
Whether you're producing in-house, partnering with content creators, or licensing syndicated video, you need a steady stream of video content that users want to watch.
3. User Experience > Short-Term Revenue
The temptation to over-monetize with video is real because the CPMs are so attractive. Resist it.
Users will tolerate reasonable video ads on content they chose to consume. They will abandon your product if you assault them with auto-play, interstitials, and excessive pre-roll.
Find the balance. Test rigorously. Listen to user feedback. Optimize for lifetime value, not session revenue.
4. Mobile First, Always
If your video strategy isn't mobile-optimized, you're leaving enormous money on the table. Mobile video inventory commands premium CPMs and provides better user experiences.
Design for mobile first, then adapt to desktop, not the other way around.
5. Measure Everything
Track not just revenue but:
- Video completion rates by placement type
- User session length before/after video ad exposure
- Retention rates for users exposed to different video ad loads
- Sentiment and support tickets related to ad experience
The data will tell you where the sustainable sweet spot is between revenue and user experience.
The Future Is Even More Video
If anything, the video ad premium is increasing, not decreasing:
- Connected TV advertising is exploding, bringing even more TV budgets into digital video
- Short-form video (TikTok, Reels, Shorts) is training users to expect and engage with video content
- 5G networks make video streaming frictionless even on mobile
- Programmatic video advertising is maturing, improving targeting and CPMs
- Interactive video ads are emerging, potentially increasing engagement and value further
The gap between video and static ad monetization isn't going to close. If anything, it's widening.
Conclusion: Follow the Money
In digital advertising, video ads print money in a way that static ads simply don't and never will.
The CPM gap is 10-20x. The attention gap is even larger. The advertiser demand gap is fundamental and structural.
If you're building a content product and want sustainable monetization, you need a video strategy. Not as a nice-to-have. Not as a future enhancement. As a core part of your product from day one.
During our time with the AT&T news app, video advertising transformed our economics. It turned a moderately successful product into a highly profitable one. It funded the creation of better content, which drove more engagement, which created more video inventory, which generated more revenue.
That's the virtuous cycle of video monetization.
Just remember: maximize video inventory while respecting user experience. The revenue opportunity is enormous, but it only works if users keep coming back.
And whatever you do, don't auto-play video with sound. Some revenue isn't worth the user rage.
This post reflects experiences from 2018-2019. The specific CPM numbers and multiples are pulled from my fallible memory, and may have evolved, but the fundamental gap between video and static ad monetization remains, if anything, even more pronounced today.