Plenty of Room for Growth Seen in Online Video Advertising
SAN FRANCISCO -- Online programmers and distributors have an opportunity to increase their share of total video ad revenue, but the Internet video industry may not be ready to handle the scale of ads and money that conventional TV handles, industry executives said late Wednesday. “Most of us are probably not as big as a single episode of American Idol,” CEO Erick Hachenburg of Metacafe said at an Online Media, Marketing and Advertising conference panel. One reason ad money hasn’t found its way to online video and keeps going to TV is that it’s easy to spend there, he said. Advertisers still can’t spend that kind of money on online video, Hachenburg said. No one can collect an audience the size of traditional TV online yet, and Web video companies need to “scale the business quickly enough to be able to be effective,” he said.
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As viewers’ habits change, advertisers are taking note, Hachenburg said. “There is a group of people that you can no longer reach at all on TV.” Some viewers are watching all their programming online or on DVRs, he said. Consumers are voting with their time, said Sid Gorham, Nielsen executive vice president. “Clearly, we've hit something of mass scale that needs to be measured.” Nielsen customers are asking for online video audience measurements that can be lined up against those for conventional TV, Gorham said. “They want to be able to compare it to television,” he said. “We're spending a lot of time making sure we make a measurement system that can be combined and disaggregated in ways that make sense."
Online video ads can assume the function that magazine ads once had, giving consumers more information about a brand or product than a conventional TV spot or billboard, said CEO Jim Louderback of Revision3, an online video production network. Readers used to say they valued the ads as much as the editorial material in magazines, he said. “You could really get to know a brand by reading what they put in a magazine ad,” Louderback said. Online video can provide that depth of experience, he said. “It’s not just a reach and frequency vehicle,” like conventional TV, he said. That makes setting up comparisons between TV and online video difficult, he said.
WealthTV’s deal to distribute its linear pay-TV service through Roku boxes (CD Jan 19 p18) may be the first of many such agreements, said Brian Jaquet, director of marketing for Roku. “There are more where that came from,” he said. “More and more content providers are looking for ways to provide their linear feed and compliment it with an on-demand library of content and deliver it for a set price a month."
Younger consumers will be more likely to abandon their pay-TV subscriptions if they can get the programming they want in other ways, said Kevin Stephens, head of device partnerships for Boxee. “For people who have been exposed to the Internet before they have been exposed to sex, generally speaking” he said he thinks the “solution of cable as a standalone service will probably go the way of the landline phone.”