Internet video has been a hot subject for a while now and analysts have been quite happy throwing predictions around in an attempt to make billion dollar estimates a self-fulfilling prophecy. eMarketer estimates that by 2009 $1.5 billion will be spent on internet video advertising, this being based on the 149 million people who will watching online video in either streamed or downloaded versions by that time. I've just received a
Financial Times article based on a report by Adams Media Research that claims that ad-supported online video will net $1.7 billion by 2009. Inexplicably, this same report suggests that most of the online video revenue will come from pay-per-download charges which seems, frankly,
incredible given the "move to free" we are still seeing.But I digress...
None of these estimates are unreasonable but they are useless unless certain persistent problems keeping advertisers at bay are solved and unless traditional models of advertising are re-evaluated.
What advertisers think the problem isAdAge ran an interesting article recently that described the problems facing advertisers and online video services looking to monetise their content in terms of 4 fundamental issues:
*Fragmented audience
*Limited (appealing) online inventory for advertisers
*Lack of video formatted for the web
*Unclear model for ad-buying
The real reasons for the lack of advertising spend on internet videoThese are all valid points from the advertisers' perspective but none of these pick up on the fundamental reason why some consumers are moving online in the first place or the
consumer habits that have changed with the onset of online video. Among these reasons are:
*Increased choice of content
*Improved access to content at the right time
*Increased ability to interact with video content online
*Avoidance of advertising that interrupts traditional TV programs
*Ability to flit between active and passive consumption models for watching video
*Free video
*Short entertaining video sequences that eliminates the need for fruitless "channel hopping" that characterises many people's TV viewingWhat does this mean? The things that advertisers see as "problems", consumers see as "opportunities". Advertisers are losing their passive audience
sat in front of the TV who may or may not be paying attention to their ad messages and they're worried about losing "eyeballs". Why aren't they thinking of new ways to advertise to this active consumer base, rather than figuring out ways to fight the consumer habits with
DRM, repurposing offline content for online by wrapping it in ads, the
pre-roll? All of these are reasons that some consumers escaped to begin with.
The "threat" of Ad-avoidanceNielsen Media Research released a report recently that attempted to assuage advertisers' fears about the ad-shy habits of DVR owners, in which it claimed 1/4 of ads recorded on DVRs still get watched. 1/4? 25%? Is this a heartening figure? The report also points towards very specific kinds of shows that are generally watched uninterrrupted, including local TV shows, shopping channels and soaps. Again, these are unlikely to be comforting figures for many, as the profile for viewers is very specific. The eMarketer press release also points out that DVR/PVR owners are highly desirable customers: young, better educated, higher income individuals. So how do you reach them?
A solution: Make content not fillerI understand that, in some sense, advertising will still follow popular content and that the internet is likely to make in-stream advertising more targeted and effective in terms of click-through rates or valuable lead generation. On the other hand, advertising can look to become attractive in its own right. What consumers are looking for almost fits the ad-model exactly - with one important exception: stand-alone ad content cannot sell overtly.
Don't broadcast messages, get them to
talk to you.
Maybe it's not about reaching them anymore. Sure, you can still do it and a lot of people still choose to consume media passively through different devices. In fact this is still the majority (something worth bearing in mind). However, there are also those that are now extremely active in discovering media of any kind. They will want to
find you. Give them the gift of discovery. This may sound incredible to an advertiser who must, after all, sell a certain amount of his product via the advertising effort. But this is about
creating passionate customers
, customers who may recommend your video or ad campaign to others. There's already a store of great ads online at places like
lovefilm and sites like
The Viral Video Chart, The
Viral Chart and
The Daily Reel.
Advertising on YouTubeGetting away from advertising as content, it's understandable that no-one is really that excited about advertising via YouTube. YouTube is a great
marketing channel but not a reliable contextual advertising platform (ditto MySpace). This may be one of the reasons that
Viacom has eventually settled for
Joost as its chosen online streaming partner. Joost is appealing as it promises higher quality picture, moderated uploaded material and social media tools that are neat,tidy and simple in their usability.
Joost, which I'm currently experiencing on beta, has grown on me over the past month. The lack of content makes it difficult to know its true potential but it certainly looks impressive. Other question marks surround whether it will really allow user-generated content, whether it can once again pull off a huge viral marketing stunt to get people excited enough to download their application (which, unlike YouTube, is desktop-based and P2P). Does it need user-generated content if it breaks deals with the major content producers? Will people be lured away from the home-grown videos of YouTube back to the TV content we know and (sometimes) love? I see YouTube remaining a training ground for aspiring film-makers, while Joost is likely to become the place to visit the established talent base. Despite all the interactivity, it doesn't look like you can embed Joost videos (reducing their blog-appeal) or that it readily allows for the message board approach that often adds to the entertainment of short videos on YouTube.
Unfortunately for Google and YouTube, this may well mean they will lose out on the rights deals they must have been hoping for with the larger networks. The advertising is likely to follow the production value (stick to what they know rather than risk an inapproriate placement next to a belching contest etc.), so how will YouTube win over their potential revenue source? YouTube has aimed for community, that's what it has become. The community likes a nice mixture of professional and user-generated content. Advertisers? Not so much.
Ultimately, those early-movers who are already enjoying online video, will want to include plenty of this new media they have learnt to enjoy. The real difference is going to be in user-generated TV channels (rather than making the content, they will decide the order) and unbound viewing (TV, internet, mobile), with a shift in media consumption towards more active engagement with media. It's clear that most consumers are now multi-tasking around content, so give them something to play with while they watch. "
Consumers who go online via broadband are five times more likely than dial-up users to access more than one type of media simultaneously". If this isn't an opportunity for advertisers, then I'm not sure what is. It proves that you don't need the viewer's full attention to effectively reach them. Why interrupt when you can enhance, why pop-up when you can run alongside, why obscure the content when you can become part of the media experience?