Online Premium Content Edges Out Prime Time TV in Ad Space Pricing

June 30, 2009

simpsons

Every year for the past few years, television doomsayers have brought out their picket signs and have pointed to all the latest technology as proof that this year is finally going to be the year that television becomes obsolete. While this year is likely to be no different, a significant milestone has just been reached marking television’s continued descent from its once untouchable media superiority. Last week, Bloomberg reported that for the first time, popular television programs like “The Simpsons” and “CSI” are fetching higher advertising rates on streaming television websites “Hulu.com” and “TV.com” than they are during their native prime-time television slots. Specifically, marketers are now paying only $20-$40 per thousand views for prime-time television ad space, but are willing to pay up to $60 per thousand views, at times twice as much, on Hulu.com.

One reason that this type of online advertising was able to overtake network advertising is that television advertising is in decline, with one prominent analyst forecasting that “the major broadcast networks could be down as much as 15% […] for prime-time advertising sales for the fall season.”

The rising cost of online television advertising also reflects a particular potency that is due both to its current format as well as to the internet’s inherent interactivity. This current format consists of a few single ads dispersed throughout a streamed television program. Unlike traditional TV, the brevity of these intermissions almost ensures that the audience remains captive, virtually guaranteeing their attention. Additionally, this format’s lack of advertising clutter has been demonstrated to almost double the recall of any particular ad shown compared to prime-time television.

Importantly, these strengths of the current online television format are largely due to this limited supply of advertising space. While the typical prime-time television show will have about nine minutes of advertisements, premium online programming has a mere 37 seconds of advertisements. If these online distribution channels try to increase the amount of advertising in order to boost revenue, they will end up eroding its value, so they must do so carefully and with moderation, or else illegal downloaded content free of ads may seem like a more attractive alternative.

The advertising format aside, online streamed programming has certain inherent advantages over television. It primarily allows users to watch their favorite programs when they want and where they want (as long as they have internet access). Despite a growing number of people owning DVR’s who can watch their shows when they want, they still must watch them on their TV and pay a premium for this feature. On the downside, online viewing may not always have the same picture quality or continuous playback that TV does, but rising bandwidth will soon overcome this problem.

One last consideration is that the current audience for online television viewing is significantly smaller than that of traditional television networks, meaning that it cannot generate nearly the same ad revenue. So the sky is not falling for traditional television just yet. But this new media channel will continue to grow and while it does the networks must transition wisely to take advantage of it, staying wary of cannibalizing their traditional channels and of pushing consumers to piracy by overloading their streaming content with too many ads.

From Bloomberg.com


U2 Lands on Letterman

February 13, 2009
U2+CBS=$

U2+CBS=$

We’ll file this post under “innovative use of media” (which is nothing new for U2).  The band has announced that it will appear on CBS’s The Late Show for an entire week to promote the release of its new album.

Given the consistent slide of music sales in the US—a 45 percent decline in the number of albums sold since 2000 (src: NYT.com) it’s not surprising that bands and labels are looking for innovative ways to promote their products (Radiohead’s “name-your-own-price Internet release,” the proposed Ticketmaster / Live Nation merger, guest judges and audience members on “American Idol,” etc.).

What’s interesting about these types of arrangements is that they mirror a more broad marketing strategy—integrating a product into the world of the audience (the old “integrate vs. interrupt” approach).  Whether it’s getting a single track included on EA’s “Madden NFL” or licensing your music for commercial use as Moby and Sting have done, it’s apparent that the old play book is being updated for the digital age (regardless of the product being promoted).

The new paradigm seeks to obtain respect from the audience, and looks for ways to align a product with an interest, whether the forum be on Facebook or “Friends.”


Data Offered to Google TV Advertisers

February 2, 2009
Now Available With Tracking

Now Available With Tracking

In a move that is likely to make creative and media teams cringe, Google will be offering viewing data to advertisers who have purchased television media time through “Google TV Ads.”

Advertisers who place television advertising via the “Google TV Ads” system can “… be provided impression data for ads that appear during shows that consumers record using a DVR. The data [may] shed light on how frequently specific ads are actually played back or skipped over by DVR users” (read full Google posting here).

Advertisers could use such data to determine which creative spots are less prone to fast-forwarding and which networks perform better for certain brands.

Although Google TV represents only a small percentage of the overall television audience, this move represents another shift in the measurability of advertising effectiveness.  Agencies would be well advised to continue leading the discussions with clients on the most effective ways to invest their media dollars, and the messages that resonante with their target audience.


Maybe Print Isn’t Dead?

February 2, 2009

Blogger Gate

I ran across an interesting article last week in the Start-Ups section of The New York Times. A company in Chicago will be reprinting blog posts on regular paper for free distribution in big cities. The Printed Blog will feature topics diligently covered by locals with advertising surrounding the editorial.

This innovation is a perfect merging of new 2.0 philosophy and tried and true old school media. Because all of the content is “recycled” from bloggers, the weekly will be able to cut one of the biggest expenses that currently have traditional newspapers in a bind – reporters. Instead, they share some of their ad revenue with the bloggers they publish.

It’s a novel idea – especially since advertisers will pay much more for print over online (it’s an even trade off, as they can take advantage of the fact that the papers will be super localized).  Whether The Printed Blog will manage to prove a success, will depend on if the public accepts the bloggers as a dependable source for news and opinion.  These sages of the online world have struggled for validation among professional editorial writers since the web first went 2.0.  Is this newspaper the next step in getting it?  And have advertisers found an effective new media channel?  Guess we’ll just have to wait and see.

The first issues are scheduled to be released tomorrow in San Francisco and Chicago.


“TV Industry Faces Ad Avoidance Crisis More Severe Than Financial Crisis, Warns TiVo CEO.”

October 24, 2008

I read a column recently called :

“TV Industry Faces Ad Avoidance Crisis More Severe Than Financial Crisis, Warns TiVo CEO.”

If you are at all in/around the space of television advertising, you might want to take a look at it … Self professed interactive television guru Jack Myers’ column is worth a look.

Myers paints a picture that’s pretty bleak for us in the tv ad industry. The message: we’d better evolve. The article, citing TiVo’s ability to track on a micro level, consumer behavior and ad avoidance, really points to a situation that brands might want to make the decision not to advertise. Obviously, if you create entertaining commercials, more people are apt to NOT fast forward … but, the fact is, people don’t want to see advertising, and now, 3.5 million households can actually avoid them. And, with TiVo beating the DISH Network patent problem, they are going to be in most every household pretty soon (5 years? 10 years?).

For advertisers, there is another way to go.

The challenge is, rather than challenge your agency to produce compelling and entertaining commercials make interactive and engaging ones. How? Well, first off, advertisers need to look at tv differently. It’s no longer totally a lean back, entertaining delivery system. A lot of viewers, and more each day, are either multi-screeners with Internet and TV in the same room at the same time, or, are watching TV on their computer.

Changing the mentality of the advertiser is on the agency.
Finding the solution, on the networks and cable folks.

Can that happen? Yes. Is it? Well, it was!

Years ago, I was part of a start up called actzero. We were an Intel Capital and angel investor funded Internet company, focused on developing a Web-based solution for interactive television. Our cobbled convergence solution, the Burst Network, rested on a platform that was capable of handling 5 million simultaneous users, giving them the ability to participate in real time. We had some initial success with ESPN, Shrine Game and eBay, proving that our concept was real. Disappointingly, we were not able to raise a second round of funding and closed. At the time, as futurist Paul Saffo said, “you are ahead of the “S” curve of adoption.”

But, all is not lost (well besides that $4 million we burned).

Today, David Verklin is working with Cast Ventures. That’s a new startup in NYC focusing on this new direction. From their own materials : “ service bureau focused on making cable’s advanced advertising solutions easier to buy, use and measure. Canoe Ventures provides technology solutions that leverage cable’s two-way infrastructure for unprecedented message precision, engagement, interactivity, reach and measurability, and it helps networks tap into the power of cable so they can provide most effective and efficient marketing solutions for advertising clients, ultimately, changing the way viewers use TV.”

Weird. Seems like that S curve of adoption isn’t so far out in front of us.