Watching video on the Internet has experienced exponential growth over the past few years. According to the IAB, 33 billion videos were streamed online in December 2009, which was a 230% increase over just 18 months prior. Broadband Internet connectivity has played a big part in this growth given that almost everyone on the Web, 93% of the U.S., has access, making it easier to view video online. But even with this momentum and penetration, video is still seeing some hurdles when it comes to budget allocation because of reach and efficiency issues.
One of the biggest challenges facing online video advertisers is the lack of premium content on the Web. eMarketer reports that almost 63% of videos consumed online in December 2009 were user-generated content (UGC). If the online video marketplace is going to grow, more premium video content is going to have to find its way to the Web since UGC is not going to entice advertisers who are looking for a safe environment to market their brand. The biggest inroad for providing premium content has come from aggregators such as Hulu, who have tapped inventory from television networks and movie studios, providing free content to consumers in exchange for incorporating limited commercials within the programming. These types of efforts have begun to expand online video reach, which has been a big concern for major advertisers.
A large untapped market has been original cable programming. Until recently, watching most cable programming online hasn’t been an option for consumers since cable networks are reluctant to make the content available for free online while consumers are currently paying for the service offline. One solution for moving more premium content online is TV Everywhere, a system strongly supported by the top two cable companies, Comcast and Time Warner. TV Everywhere allows paid cable subscribers access to cable programming online. Before viewing the content, consumers must first prove they have a subscription to a cable provider offline, giving them access to all their paid cable programming online. Comcast rolled out the system to its 16 million subscribers last December, but adoption has been slow. Blame that on the 11-step authentication process that turned off a lot of consumers. Time Warner’s rollout hasn’t been quite so aggressive, testing the service with 6,000 subscribers in New York before potentially rolling it out nationally. If successful, this would help increase online video’s reach potential.
However, as more premium content moves to the Web, there is a concern that sites will start charging for it. There have been rumors swirling for months that Hulu will move from an ad-supported model to a paid-subscription model or some hybrid of the two, which could negatively affect viewing levels online. Critics of TV Everywhere worry that if consumers flock to services such as Hulu to watch premium cable content, they’ll cancel their current cable subscriptions. Depending on how much content a person consumes, an online subscription to a site such as Hulu is likely to be considerably less than a consumer’s cable bill, which could positively affect viewing levels online.
Another hurdle for advertisers moving video dollars online is the cost. Pre-roll and in-program CPMs for premium content can be two to three times higher than CPMs for the same programming on television. A lot of marketers are already unsure about shifting dollars from television to online, and higher online CPMs aren’t making the conversation any easier.
However, to combat this premium pricing, there is research that online video contributes to significant lifts across brand metrics much more than television. In a 2008-2009 study by Nielsen, brand recall for an online video advertisement was 22% higher than brand recall for a television advertisement.
So while CPMs for premium online content are higher than television CPMs, value should be associated with knowing a consumer is engaged with a brand for a full 15 or 30 seconds, and it is often reflected in the metrics.
Although everything regarding the Internet seems to happen at lightning speeds and it’s easy to get caught up in the excitement, it’s important to remember that the online video marketplace is still in its infancy. The first U.S. television ad was broadcast almost 70 years ago. The first online video ad ran less than a decade ago. It will be years before online video spending matches TV spending, but online video advertising will continue to thrive as more content becomes available online and CPMs level out.
This past week I had the chance to revisit one of the longest-standing interactive industry trade shows – ad:tech – at “home base”, The Moscone Center in San Francisco. Frankly, the show had lost some punch over the past two years as most of the event felt like one continuous vendor sales pitch. Thankfully, that was not the case in 2010.
With a reported show attendance of over 11,000, it’s clear the business is back in full force. The conference sessions and exhibit hall featured new product introductions, technology platforms and services that span the digital advertising world, including:
Ad Networks, Ad Servers, Affiliates, Creative Services, Email Marketing, Rich Media, Media Planning, Metrics/Analytics, Mobile, Portals, Publishers, Research, SEM and Viral Marketing, just to name a few.
Chatting with a long-time friend and Chief Revenue Officer Mike Pubentz of dmg world media and producer of ad:tech, the show was completely overhauled to create higher quality engagement between speakers, exhibitors and attendees. For example, a new “Marketing Masters” series provided a two-hour session on hot topics that mattered most to attendees. The sessions featured broad panels and allowed a good deal of back-and forth between attendees and speakers.
One of the most gee-whiz demos I saw was a true Multi-Touch interface from a company called Dedo located in Dallas, Texas (yes, I know, the irony of traveling all the way across the country to discover a cool technology located right in your own backyard). The best part of the technology is that it’s built with Adobe Air and does not require a lot of the expensive hardware equipment associated with Microsoft’s Surface computing initiative.
The image featured here takes Twitter data and displays it real-time, and classifies the posts by different parameters. Here, the Puma brand was recently mentioned in a keynote session and therefore has more prominence. It’s a quick and easy way to identify hot topics with a volume of mentions.
Here are some key take-aways from ad:tech San Francisco…
Zig when others zag
Jaime Cohen Szulc, CMO, Levi Strauss & Co. delivered the opening keynote and stressed the importance of creating clearer separation of strategy and execution when deploying new campaigns. He noted that most marketers are like 5-year olds playing soccer – they tend to all run to the ball in the same spot on the field. He says to play your position and be strategic about deploying your assets where the competition is not.
Content is no longer king – data is
Just a glance at the trade show flow to see the huge number of data platforms, aggregators, demand-side platforms, networks and exchanges quickly left you with the feeling that you better bone up on your math skills or you’ll quickly feel out of touch. Even keeping up-to-speed with the industry acronyms during presentations was a hurdle. Most folks agreed that a vast majority of VC money is pouring into anything with the word “data” in the elevator speech. Word of caution: most also noted there will be major consolidation in the coming months. So be very careful whom you trust data to or else the info may disappear with the company.
Design is critically important
We’re not talking about the debate of how best to design work for print or web, we’re talking how to design for specific channels. For your next project, if the design resource you are using is not assigning the project to a digital art director who lives and breathes the medium, then skip it. There’s no way they will get the project right unless they are sensitive to the intricacies of the social tribe they are participating with.
Measurement – please stop focusing on the click-through, really!
Dave Smith of MediaSmith was spot on in his plea to get all marketers to look at their response data in a holistic fashion. While many of us in the digital space know this well, it’s worth repeating; an impression is still an impression – even if there is no click. Bottom line – you are flying blind if you don’t invest in better measurement. Why not get the complete picture and leverage all the data points at your disposal?
The iPad is freakin’ HAWT… so get on board.
Tablets are the new TT – Transformational Technology – and many at the conference agree the form, function and features of the new iPad will revolutionize how we consume many forms of media. The real question is when. Suddenly all those iPhone developers are dropping what they are doing and jumping to iPad projects. Hint, hint.
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This article first appeared in MediaPost on December 7, 2009.
After reading the article regarding the new industry ad campaign from the IAB, I have to say I was saddened. As a 15-year digital marketing practitioner, I felt my heart sink while reading how the IAB has deemed my profession “creepy.” Granted, there are studies on people’s views of professions that rank ‘advertising’ right along ‘used car salesman’ for trust and appeal, but at what point did it make sense to highlight a misconception? While the intent was right, the execution was really off — especially the ad creative.
So many questions abound:
Why are we demeaning our industry with the very point that rallies our detractors?
- Rep. Rick Boucher (D-Va.) must be dancing in the halls of congress.
What in the world were we thinking when we played up invasion of personal privacy as a fun way to make a point?
- Between ID theft, coverage of Erin Andrews and her peeping Tom and child predators stalking kids online don’t you think Americans are more than just a little concerned already?
And did someone really think we could convey the right information for such a complex message using demeaning headlines?
- There are more than enough studies out there that show how “snarky” creative always backfires. How will this endear us to the general public?
Yes, the creative is meant to turn a negative into a positive and right what are common misperceptions. But that’s like trying to turn the Titanic before hitting the iceberg. Folks, you don’t have to get off the boat, just take the warm weather route!
What this represents is a huge missed opportunity. We should be focusing on the positive benefits of online marketing – not the negative. Hints: The right message, the right time, the right place for the right person. Heck, you could have even gone green: “Less is more. We eliminate ad waste!”
If you need validation, remind folks it’s the same way you get smart recommendations for books on Amazon.com. And how you don’t have to re-type your cc info on your favorite sites. People appreciate convenience and personal benefit, not industry threats.
And not to totally degrade the effort, I’d like to state there are good aspects about this effort. If you participate in this industry at any level, make it a point today to read the entire “Privacy Matters” page. Every tab, every sub nav page.
There is good content and illustrations of important issues. So much so that if you read the content and think about it, they really got the entire campaign upside down. If they had highlighted the points in the support points, we’d see a totally different campaign.
Well, guess that leaves us with another important aspect of online marketing – Optimization! I strongly encourage the IAB to traffic out another ad campaign ASAP.
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