March 23, 2006
ANA Marketers: Our TV Spots Are Tanking
An interesting poll of advertisers conducted by Forrester Research and reported by Zachary Rodgers.
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Television is an increasingly wobbly target for ad spending and will likely soon begin hemorrhaging dollars to interactive and other channels. That's according to a Forrester poll of 133 advertisers who control more than $20 billion in advertising. Among those surveyed were Charles Schwab, Colgate, Dunkin' Donuts, Johnson & Johnson, Mattel, Pfizer, and Verizon.
The study, undertaken in conjunction with the Association of National Advertisers (ANA) and presented at the TV Ad Forum in New York, found 78% of these marketers feel the potency of their television advertising has declined in the last two years.
Seventy percent believe digital video recorders (DVR) and video-on-demand (VOD) will "reduce or destroy" the effectiveness of :30 spots. And once DVR penetration grows to above 30 million households, 24 percent intend to cut their TV ad budgets by at least a quarter and reallocate that money to online advertising, product placement and other channels. Smaller percentages said they'd pursue program sponsorships, product placement and online video ads (45%).
Posted by Martino Mingione at 11:06 AM | Comments (288) | TrackBackMarch 20, 2006
NCAA March Madness Video Streams
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Here we are in the middle of NCAA March Madness, with college hoops fans among the best consumer audiences a marketer could hope for because they are loyal, passionate, educated, and affluent.
As of Sunday night, CBS said its NCAA March Madness on Demand (MMOD) served more than 14 million streams of live video from the 2006 NCAA® Division I Men's Basketball Championship. It logged more than 4 million visitors during the first four days of the tournament.
CBS said that a total of 1.15 million users have registered for March Madness on Demand.
CBS also scored nicely with sponsorship of the extravaganza from the likes of Courtyard by Marriott, Dell, Lowe's, Pontiac, and State Farm.
Posted by Martino Mingione at 12:37 PM | Comments (23) | TrackBackMarch 09, 2006
The Third Screen
Information week reported that mobile phone content is forecast to reach $43 billion worldwide by 2010, up from $5.2 billion in 2004. Content covers music, games, and video. The study is a forecast by research firm iSuppli Corp.
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Video offers the most significant long-term opportunity in the mobile-content market, according to Mark Kirstein, iSuppli vice president of multimedia services and content. Growth in the mobile TV market will rely on new phone deployments, iSuppli said, estimating TV-capable phones will only represent 12 percent of the market by 2010.
To be sure, those growth projections sound impressive, but what about mobile advertising? According to Ad Age, advertising and cell phone-based content aren't mixing well yet. The article goes on to point out that advertisers are not even in any discussions about getting their message onto phones.
Nevertheless, a survey by Airwide Solutions, a mobile software company, suggests that there’s a huge appetite among marketers to get connected to cellphones, given their very personal nature. The survey, published Feb. 27, claims that 89% of major brands are planning to market via mobile phones by 2008, and more than half of brands plan to spend between 5% and 25% of their marketing budget in the medium in the next five years.
In my humble opinion, advertisers will play a bigger role in the wireless universe once consumers start feeling “digital sticker shock,” as they add up all the seemingly small charges for new content.
A number of commentators feel that wireless carriers are standing in the way of progress and suggest that carriers want to protect a pricing model that favors subscriptions over a wide array of free ad-supported content that cuts them out of the revenue picture.
Posted by Martino Mingione at 09:28 AM | Comments (10) | TrackBackMarch 08, 2006
In his own words ...
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Google CEO Eric Schmidt talking about television's lack of targeting ads in a similar fashion as Google's targetability in online search. He also hinted that Google may have an answer for television.
Posted by Martino Mingione at 03:47 PM | Comments (18) | TrackBackMore Evidence of the coming Adpocalypse
I've made the observation numerous times that people will ultimately opt for an ad-supported VOD model over a pay-per-view scheme.
Broadcast networks are selling some of their most popular shows on Apple’s iTunes for $1.99, but a new study finds that most consumers would be willing to watch an ad if the sponsor picked up the cost of the show. And if that model becomes the standard, more would be interested in buying a video iPod.
The survey, which explored attitudes toward video iPods, found that 54% of respondents would be more likely to purchase an iPod if TV programs could be downloaded free of charge in exchange for watching a 30-second advertisement.
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Read more about that study in AdAge. (Sorry, subscription required) |
I think it is unrealistic that an advertiser would pay $1.99 for one ad insertion to one iPod viewer because that implies a hefty $1990 CPM. More realistic is that multiple ads would have to be inserted into the content, in a similar manner as regular linear operates.
Oh, and I recall writing about an upstart company called Ultramercial that forces you to choose: your money or your time.
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See how the Ultramercial business model works. |
February 28, 2006
Behavior Targeting in VOD Streams
It is inevitable that video on demand (VOD) will be ad supported. When it does, will the advertisements be targeted to who is watching? Perhaps not in the first generation of that future ad market, but that too is inevitable. So I was curious how behavioral targeting was progressing with online advertising. Clickz provides some answers.
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Behaviorally-targeted advertising campaigns grew to double the impressions of the year before, while click-through rates increased by 166 percent in 2005. That's according to data 24/7 Real Media gathered from its OnTarget behavioral targeting network...
If we could build a behavior targeting (BT) ad model for television, I’m not sure which pieces from online are applicable. For example, BT may be most successful when advertisers "retarget" customers or prospects with relevant advertising after they've visited the advertiser's site. In television the only possibility of that I can see is if a long-form advertiser-specific content substituted for online’s advertiser web site.
One thing about online BT that I find of possible interest is that audiences are more receptive to BT ads when they are not contextually targeted to the content of the target site. For instance, BT ads targeting the ‘Women’ segment performed below average when served to sites in the Women’s Interest vertical, but performed significantly better on sites in other segments. Might that mean that commercials that are targeted to a specific viewer but not consistent to the show might stand out?
Posted by Martino Mingione at 09:27 AM | Comments (51) | TrackBackFebruary 08, 2006
Ogilvy's New New Media Unit
OgilvyOne Worldwide launched Neo@OgilvyOne, the brand and entity that will handle digital and direct media in the wake of the mOne split.
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Nasreen Madhany is heading up Ogilvy's newly named and restructured network. Madhany will hold the title of global CEO of Neo@OgilvyOne and global head of digital content at OgilvyOne Worldwide.
"Digital media is a growth business and one that must be closely aligned with the creative process," Madhany said in a statement. "As part of the Ogilvy network, we are uniquely advantaged to work in partnership with Ogilvy companies to deliver big ideas that cross all media channels for our clients."
The organization will try to keep up with the growth of digital media by making acquisitions, by partnering, and by being aggressive in hiring. Digital arenas it will tackle include digital advertising, digital TV, e-mail marketing, search marketing, blogs and vlogs.
Neo@OgilvyOne's global clients include American Express, Cisco, DuPont, IBM, Lenovo, SAP and Yahoo! Its U.S. clients include Allstate, Ameritrade, Pitney Bowes and Six Flags. The new entity operates "in all world markets," according to the company.
Posted by Martino Mingione at 02:36 PM | Comments (221) | TrackBackFebruary 07, 2006
Rocketboom to sell ad inventory on eBay
Some poeple believe that buried somewhere in the arcane business that is known as 'advertising' is an auction type mechanism. While auctions are not generally applied, Rocketboom is carrying that logic to its ultimate conclusion by selling its video Web log ad inventory on eBay.
This means that Rocketboom is bucking the traditional Internet model because it isn't working with a media buyer or ad network. Rocketboom reserves the right to reject any bidder, and said in its eBay posting that it won't accept pornography or gambling ads.
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The bidding, which started at $500, had reached $14,999.99, by Sunday. The eBay ad promises one million impressions minimum. The two top bidders, "Dave-Texas" and "FivePercentCard_com," don't appear to be brand marketers. Baron said he originally anticipated that the ads would sell for somewhere between $8,000 and $40,000, based on an estimate Internet expert Jeff Jarvis gave the company.
It is not surprising that the bidding had not yet reached the higher valuations, and that the top bidders are not big-name brands. A decision to spend takes way too long to make it through the bowels of the decision-making process.
Rocketboom used eBay because conventional ad sellers moved too slowly. "We tried to go with ad sellers, but it was taking too long and our deadlines were never met," he said. "We kept hearing that it was taking too much time for the advertisers and everyone else to understand how it could work."
January 26, 2006
What! You mean paper is not the most efficient way to do business?
There is an article at MediaPost entited 'Top MediaCom Buyer Gives Stations The eBiz, Demands Paperless Invoicing.' Essentially, it says that MediaCom's Anne Elkins wants to "shift completely away from paper invoicing."
"We believe that this is an absolute necessity for doing business now and in the future," she wrote, adding that e-invoicing saves time for both sides and cuts down on errors. Elkins, evp-director of local broadcast, is a member of an industry task force on e-business.
The TVB says about 1,000 stations and 15 major agencies are now sending invoices electronically.
I am sure that the author of this article got all the facts and quotes correct. But it does miss a major point of what is happening in agency/station eBusiness transactions. Namely, Donovan Data Systems has started to sign up many rep firms and station groups in a complete eBiz solution called MediaOcean. NBC's O&O's were the first to embrace this direction.
That electronic transaction and workflow solution covers so many more topics than invoicing alone and that is where the real action is at. It is like comparing a modern figher aircraft to one from decades ago. There really is no comparison.
It appears that some stations are signing up for MediaOcean because they sense that someday media buyers just might stop purchasing ad inventory that is more costly to process, thereby, creating more agency overhead costs. That is the same basic thrust of why paper invoices have to go, too.
Hint, hint: the agencies are competing on very slim margins and transactional efficiency is very important.
Posted by Martino Mingione at 04:13 PM | Comments (10) | TrackBackJanuary 23, 2006
MSN Names Ad Partner for Live Streaming Events
Excerpts from ClickZ News:
Microsoft tapped Lightningcast to handle video ad management for MSN Video's live streaming events, an area portal execs have described as growing in strategic importance.
Lightningcast has supported some real-time online events for Microsoft since 2004, when it began serving ads into WindowsMedia.com's Media Guide. Among other events, it has supported MSN's live streams of Fox Sports college football broadcasts and its own coverage of the New Year's Eve festivities in Times Square.
The company launched its dedicated platform for live streaming video and audio back in July. The offering addresses the unique problems of ad management within streamed, real-time events. For instance, it removes and replaces ads that may already occupy a broadcast video feed... The platform also has support for display ad elements that are synchronized with a streaming ad.
Serving ads in live streaming events, a growing area of interest to all the portals, poses inherent challenges to inventory prediction. Portals are accustomed to forecasting inventory in terms of impressions and pageviews, whereas with live events, duration of time watched is an equally important metric. Lightningcast claims to address this by analyzing the historical duration of user connections for its publisher clients. However, it remains difficult to predict the audience for certain types of real-time events. In the case of AOL's coverage of the Live8 concerts, for instance, the number of streams was far beyond what most industry watchers anticipated.
Posted by Martino Mingione at 07:42 AM | Comments (110) | TrackBack
January 17, 2006
Google is acquiring a radio advertising company, broadening the reach of its ad business.
Google will pay $102 million in cash for DMarc Broadcasting, a Newport Beach, Calif., company that works with radio advertisers.
My quick review of their web site indicates that DMarc can identify demographic/spot market combinations to meet advertiser goals, has some sort of distribution/delivery mechanism, inventory management, and reporting.
The deal calls for Google to make additional cash payments based on product integration, net revenue and advertising inventory targets. Those payments could total $1.13 billion over the next three years, Google said.
Google plans to integrate DMarc technology into its AdWords platform, creating a new radio ad distribution channel for Google advertisers. This may be how they think about television, too.
Kevin Newcomb had some interesting comments about the acquisition. Here are some excerpts that interest me:
While the move may be surprising at first, a deeper look shows Google's platform can potentially be applied to many kinds of media, bringing the same benefits of an auction-based, pay-for-performance model to other channels. It's likely Google believes it can do a few things in the radio business, including making radio advertising more accessible to the "long tail" of advertisers, and making radio advertising more targeted and measurable, Jeff Lanctot, VP of media at Avenue A | Razorfish, said.
"If you consider those benefits, they really aren't search- or Web-specific. Over the next several quarters and years, I think Google will try to take this same approach with newspapers, magazines and TV; they would like to be the marketplace where all media is bought and sold," Lanctot said.
Radio makes sense as a starting point, both for its similarity to search in its historic direct response focus, as well as for its potential ties to Google's local efforts. "Local businesses could turn to Google for a package that includes search listings, radio spots...and eventually TV spots and newspaper ads," Lanctot said.
... "Offline advertisers will ... come to expect detailed reports and accountability. They'll want to know how effective the radio ad was and whether it resulted in new business," Beal said. "The same level of accountability that search marketers have been held to will now apply to traditional advertising..."
Google will need to address the question of who will manage the creative process... A likely scenario is one that gives advertisers a self-service option to choose elements of a radio ad script and then use a partner to record them. A similar approach is taken by SpotRunner, which last week launched a tool that offered a similar service for local spot cable ads.
Posted by Martino Mingione at 12:10 PM | Comments (972) | TrackBackJanuary 16, 2006
You can write this down in your TV diary
VNU officially went into play this morning, announcing it has received a buy-out offer from a consortium of private equity firms valued at about $8.8 billion.
The consortium includes AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co., Permira and Thomas H. Lee Partners.
While the companies did not disclose their plans for VNU, they are expected to sell the assets of VNU piecemeal to other companies. VNU is the parent of Nielsen Media Research, ACNielsen and business publications such as Adweek, Billboard and The Hollywood Reporter.
Whoa there buster, you're moving too fast for me
Each industry sector tends to create B2B electronic systems that help reduce cost, improve accuracy, and speed transactions between the companies within that particular ecosystem. If you made a list of industries and wrote down what B2B systems are in place, the largest on the list without any significant notation would likely be advertising.
Full disclosure: I’ve been involved with this arcane topic for too many years of my career when I used to run one of the companies in this space and many of my consulting clients employ me to help them with B2B solutions.
But why do I stay involved? Simple, the complexity of transacting commercials for linear television pales in comparison to what will happen in non-linear, video on demand requirements for the future. In other words, if the ad industry has not fully gotten its ‘plumbing’ together yet, what is it going to do 3 years from now?
On Friday, the American Association of Advertising Agencies (4A’s) unveiled yet another new initiative designed to help speed the development of "eBiz" solutions for media buying and selling. The 4A’s mission is to design and convert all transactions between buyers and sellers to a fully electronic communications system.
When you really have not accomplished much, it is always wise for a non-profit industry group to hold another meeting and release more press announcements.
(excerpts from MediaDailyNews)
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… Dubbed the eBiz for Media Lab, the project is designed to provide a centralized location where media agencies, media companies, and their software vendors can share information and data on their progress and the systems they currently use to conduct electronic transactions…
... However, many efforts have been made independently and some companies have made more progress than others. As a result, a common set of guidelines has yet to be established. One of the purposes of the eBiz for Media Lab is to let all the participants share non-proprietary information that can lead to industry wide standards.
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[This is] a controlled environment with live data where standard message formats are used. Sending, delivering, and acknowledging receipt of live data between the agencies and media companies is achieved, and the data is sent not via e-mail but via transaction hubs that work with the traffic/sales and media buying systems…
Did you notice one of those vast improvements? Data might not be sent by e-mail! Whoa there buster, you're moving too fast for me.
Posted by Martino Mingione at 09:04 AM | Comments (532) | TrackBackJanuary 11, 2006
Consumers Prefer Ads To VOD Fees
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One of my core business beliefs is that there are opportunities in connecting advertisers to non-linear, video on demand streams. I don’t say that because I like commercials. I don’t say that because I make or sell ads. I say it because people accept advertising as a necessary factor in keeping television free and there is a lot of money spent today on linear television programs. That money has to somehow find its way into VOD.
Wayne Friedman in MediaDailyNews wrote an article today that helps prove my proposition. Here are select quotes:
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New research suggests that consumers, almost three to one, would rather see commercials than pay $1.99 for a download... The study comes from research companies, Points North Group and Horowitz Associates, who did a telephone survey of 800 people last November.
The question asked of respondents: If you missed your favorite TV show and wanted to watch it afterwards, would you pay $1.99 or have it free with commercials?" Overall, 62 percent said they would rather have commercials than pay $1.99. Seventeen percent said they would pay the download fee, and 21 percent were undecided.
Opposition to paying a fee is even stronger with younger adults, says the survey. Consumers 18-34 prefer free, ad-supported content 68 percent of the time--as compared to 26 percent, who prefer to pay a fee. Five percent of those consumers were undecided.
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This research is good news for advertisers--as they could be more involved with VOD content, said Leddy. Still, he adds that VOD deals will need to be careful. "Unless the advertising is short and sweet, it won't work in the VOD environment."
It is interesting to note that in all the Internet television and iPod VOD deals that have been announced by major media companies, only one deal has been structured in which consumers watch free content with commercials -- Time Warner and AOL.
December 22, 2005
GoogAOL wants to sell TV and Print ads, too
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I've refrained from blogging about the rumors and eventual news of the Google and AOL deal. I am much more interested in what they will actually do together and judge whether it might lead to opportunities. Well, we are just starting to get some hints about that.
Apparently, the partnership is more than just an online advertising play. As part of the deal, both companies plan to explore the sales of so-called offline media like TV and print.
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"With this agreement, AOL's sales force will now be able to sell all types of online advertising ... and we'll explore expanding the partnership into selling television and print advertising," Time Warner Chairman-CEO Richard Parsons wrote in a staff memo, which surfaced Wednesday in a report by the Financial Times.
I am very interested in the television ad sales because I used to sell enterprise software into that market and Time Warner was one of my largest customers. It is also more lucrative than Google's search marketing niche.
Print advertising is a topic I am less familiar with, but Time Warner does have a vast magazine infrastructure from which to draw. Judging by Google's first test in print advertising, they will sorely need that expertise.
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For follow up on Google's first misstep, read 'Google is not invincible. There, I said it and I am still standing.' |
MediaDailyNews notes that a "big new Google advertiser, coincidentally, may be AOL. As part of the deal, Google is giving AOL an estimated $300 million in "marketing credits" to promote its content on Google, which at least one knowledgeable observer believes may be used for more than just paid search placements on Google's sites."
Surely, there are many chapters yet to write about this story.
December 21, 2005
The Advertising Model Is Dying
L.A. Times (free registration required)
Los Angeles Times columnist Joel Stein has put his comic touch to the topic of advertising, which he posits is no longer a viable enterprise. - Read the whole story...
When DVRs make it possible to skip TV commercials altogether, what's the point of advertising on the medium? The networks, Stein notes, are busy making deals to deliver ad-free programming to various portable video devices.
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At this rate, we'll soon have to directly pay the real cost for most of our high-quality media. And this is when the revolution starts. Take away welfare, send their kids to war in Iraq — poor people will deal with it. But now that they've taken away Stern's "lesbian-dial-a-date," there could be rioting in the streets.
December 20, 2005
Give me your Time or give me your Money
Ultramercial says they have a patent on a business model for VOD advertising. In an email, they said "it allows the viewer to make the choice: watch an ad that 'earns' them each segment of their program - OR - pay-per-view. The viewer chooses between an explicit exchange of value: their time for the content - OR - their money."
In the accompanying graphic, you can see how they expect a viewer of broadband TV shows to navigate to the show they want to watch.
Paul Grusche of Untramercial claims that the Ultramercial approach is "being considered by two major networks to bring their shows online."
Time Magazine Considers Ad Gateway to Subscription Content
Using technology from Ultramercial, Time.com gives access to its "Person of the Year" cover story, along with full archive of articles.
In his own words ...
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Jeff Marshall, SVP and managing director of Starcom IP, commenting on the possible Google/AOL partnership.
Klipmart Rolls Out In-Stream Product
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Klipmart unvieled an in-stream video advertising product that consolidates media placement and reporting for online video ads.
Called Universal In Stream, the offering is geared toward agencies and aims to simplify the deployment of ads that run before or during broadband video content.
With the new product, Klipmart will encode a single video ad and send the execution to each Web site in the media buy. The agency receives back one consolidated report with both reach and frequency metrics.
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The target customers are media buyers who may have to place more video campaigns and executions. Chris Young, Klipmart's CEO, says "the top 30 sites on the Internet," have certified the product. The site roster includes Yahoo!, but Klipmart hasn't gotten permission to divulge the names of other publishers.
Klipmart had processed about 10 beta campaigns for agency clients using the new system.
December 18, 2005
Monetizing Video Podcasts, Washington Post style
I see that the recent video podcasts at Washingtonpost.com want to be monetized with video advertising. For the next month, they signed up EarthLink as a sponsor.
Here is how it will work. Viewers see a video slide telling them the Washingtonpost.com video will play after a commercial message. Then a 15-second ad plays, followed by the content. People can see the video podcasts either on their Video iPods, or on the Web.
I will classify this as another ‘build it and [hopefully] they will come’ exercise. Here are the problems that will keep this monetization experiment small.
So far, there's no way to dynamically insert ads into video podcasts, so ads are actually part of the overall video file. This means the ads will still be associated with the video even if someone views the content years from now.
It's also technically impossible to measure actual viewership, though publishers can determine how many people downloaded the video file. Washingtonpost.com wouldn't reveal the size of the audience for its video podcasting service, but it's presumably quite small.
Dynamic ad insersion and verification are two vital components of a healthy, large-scale ad model. Both television and online advertising could not exist without them.
The companies didn't provide details of the financial aspects of the deal, but said it was priced on a flat fee basis. MediaVest negotiated the buy on behalf of EarthLink.
December 17, 2005
Follow the Money
Many digital media business plans are created around the idea that advertising revenue will monetize their initiative. I believe this thinking is the correct one. However, I continue to be amazed how many bright people embark on a 'build it and they will come' strategy. The 'they' are the advertisers.
The first point to make is that the big money, especially in television advertising, is decided inside the media-buying departments owned by the largest agency conglomerates. Advertisers set budgets and hire agencies to deliver results.
A second point: agency profit margins are razor thin and depend upon transactional efficiency for their profitability. That is, the more it costs an agency in labor to do things like post-buy analysis, the slimmer their profit margins.
It is not glamorous to say but starting in the late 1990's, agencies began competing on their media buying prowess. Some even outsource the creative process to others! When video on demand (VOD) and digital video recorders (DVR) and broadband television become more than experiments, these agency buyers will be the one spending the real money.
I read with interest the latest projections by media research firm RECMA.
WPP's media agencies — MindShare, Mediaedge:cia and Grey's MediaCom — give the British holding company control of 22.3% of the worldwide media-planning and -buying business.
Paris-based Publicis Group, parent of Starcom MediaVest and ZenithOptimedia, increased its share of the global media-buying business to 16%.
In fact, the media-buying units of the six big agency-holding companies now control 73.6% of the global business, up from the 57.8% a year ago—when there were seven holding companies (counting Grey).
Slicing up the Pie Percent of 2005 worldwide media-buying/planning market, it looks like this:
Group WPP Group Publicis Groupe Omnicom Interpublic Group Aegis Group Havas Others, unaffiliated Source: RECMA
Now comes the bonus credit test. Which privately held software company supplies media buying (not planning) solutions for linear television and print to most of the above conglomerates? Donovan Data Systems (DDS).
Posted by Martino Mingione at 10:48 AM | Comments (397) | TrackBackDecember 16, 2005
Reach versus Targeting
An InsightExpress survey commissioned by ValueClick Media/Fastclick (Nasdaq: VCLK) had an interesting statistic in it. The respondents were comprised of 300 online media buyers.
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A significant number of respondents (40 percent) cited reach as their primary reason for using an ad network, followed by targeting (19 percent), and performance/ROI (15 percent).
note: Reach is the number of people you touch with your marketing message. Central calculation in a television ad buy is to determine how each media providers contributes to the reach and frequency goals of a media plan.
The party line amongst the Internet savvy intelligencia is that online advertising is all about ROI and that television advertising is a slowly dying medium because it is unaccountable. Another common refrain is that advertisers want ‘targeting’ and that is another reason why online grows faster than television.
So what does it tell us that even online buyers using ad networks also value reach more than targeting and ROI combined? Maybe, just maybe, this is a hint that when VOD, DVR, and Broadband TV are eventually monetized with advertising, reach will remain the most important objective.
Food for thought, anyways. I'd love to hear your opinion.
December 08, 2005
Acacia projects that New Tools will Push Interactive Advertising
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Interactive advertising is an idea that opens up a 2-way connection between advertiser and consumer. We all know that online interactive advertising has grown by leaps and bounds over the last 10 years. However, that growth may be crude when compared to what could happen after interactivity is added to television, phones, and other devices. OpenTV, the acquirer of the last company I built, is in that field of expertise.
One thing I focus on is the lack of tools for both the buyer and sellers to make this market function properly. There is no future DoubleClick yet in this field and existing Internet tools are not up to the job.
With that said, tools and middleware available for the interactive advertising industry are set to take off in the next five years, according to Acacia Research Group. This is a belief that I share, so I thought it would be good to share some of their information with you.
(excerpts from ClickZ, written by Enid Burns)
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Tool and middleware vendors offering artificial intelligence and other software applications are expected to see sales to the interactive advertising industry reach $190 million by 2010. Sales for 2005 are recorded at just $19.6 million, according to the report.
… Such applications are already used in video games, and in-game advertising. The offering creates possibilities for the Internet, mobile applications and other platforms, though each medium creates its own set of challenges...
"To deploy content across operators and handsets, you need middleware to reach all users," said [Christine Arrington, senior analyst at Acacia]
The tools and middleware that will aid advertising and marketing across multiple interactive channels is still in its early stages. Tool and middleware providers require some marketing of their own to be recognized by the advertising industry.
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"There's a world out there that advertisers can take advantage of, especially with the growth of broadband," said Arrington. "It's going to take toolmakers proving to advertisers that the tools they have can make it easier to develop interactive advertising."
The report was compiled with primary research via interviews and surveys with product vendors; technology suppliers; professional organizations and government agencies; distributors and end users within the market where possible. Forecasts were then made based on the survey and interview findings.
For anyone planning on competing in this arena, the report is a must. However it is costly. If you want that report click here and mention that Martino Mingione refered you to get a 10% discount.
December 06, 2005
Google is not invincible. There, I said it and I am still standing.
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There is a flurry of discussions concerning Google and their expansion beyond the traditional search engine marketing sector – particularly in new forms of advertising. Undoubtedly, stories appearing in the New York Times have helped contribute to this. I can personally attest to conversations with large existing companies who participate in television advertising. The question is often ‘what Google is planning?’
I am not in the ‘know’ about Google’s ambitions. But from where I sit, they have a lot to learn about television media buyers and I don’t yet see any of the necessary moves that would make them successful in that venue. Television advertising is about branding and buyers there use metrics like reach and frequency. That is in stark contrast to SEM and its cost per click CPC metrics.
It’s chic on the Internet to say that television is dead and online is where it is at. Perhaps there is a clause in everyone’s blogging contract to say that someday all money spent on television advertising will eventually shift to the Internet. At the risk of being booted off the blogosphere: that is plain wrong.
An article in BusinessWeek reminds us that Google is not invincible and that they can fall short when entering into non-SEM lines of advertising. The article’s sub-title says it all: Why its plan to resell print ads to its army of advertisers may be off to a slow start.
"Google … purchased about a dozen pages of ad space from niche publications such as PC Magazine and Budget Living. Google then divvied up the space and sold it in small pieces, often four to seven per page, to its network of several hundred thousand advertisers -- most of whom can't afford pricey magazine ads on their own."
"… Only one of 10 advertisers interviewed by BusinessWeek said their print ad performed well enough to recoup the money it cost. And eight of the 10 were unhappy enough with the results that they say they're unlikely to do further print advertising with Google."
I am a satisfied consumer who uses Google for search everyday. I am a very happy investor who owned some Google stock during a part of its meteoric rise. But, despite my admiration for the company, I must say that Google will have to amend its strategy if it wishes to meld its technology advantage with television advertising.
Posted by Martino Mingione at 03:38 PM | Comments (85) | TrackBackDecember 01, 2005
One small step for VOD; One giant leap for Marketing
Three major networks ABC, CBS, and NBC took small steps away from a business model that has served them for about 50 years. For the first time, they agreed to let viewers see for a fee current prime-time hits on cable and satellite video-on-demand (VOD) and via Internet download. Putting a price tag on such transactions could open a flood of opportunities for others and that is why I think it is short sided of the networks to approach VOD in this way.
For example, let's say that I had access to 10 million viewers in my network but that my subscribers want their VOD for free. Maybe on an average week, each household watches two VOD episodes. How could I be enterprising about this?
First, I might expect to pay the broadcast networks $20 Million (that is, 10 million homes watching 2 shows each at $0.99 per show). If this were linear television, Nielsen would say those viewers might see 88 commercials (22 ad minutes per hour, 30-second spots, in two hour long shows). However, I am a benevolent media mogul and will cut the number of ads by 25%
I suspect that I have 660 million ad impressions (66 commercials shown to 10 million homes). That's a significant opportunity: revenue selling 660 million commercials at a fixed cost of $20M to the networks for their content.
If I could get $0.03 per commercial served up, I breakeven. Everything over that is profit. More interesting is moving the ad model into a more interactive and accountable platform. Perhaps add some behavioral targeting. Marketers should theoretically love that approach: the best of both the television and online worlds.
What's wrong with the above scenario? First, the networks would not sell me VOD access to their content. Instead, they would likly drop their $0.99 per episode pricing and demand a cut of the advertising action. Second, only Comcast and Time Warner have VOD networks large enough to generate the numbers in my example. This year without the popular programs, Comcast has already served up more than 1 Billion VOD streams. Finally, the media buyers do not yet know to buy from my benevolent media company. But there are two large companies that have active plans to provide VOD media buying tools to the agencies.
That is how close we are getting to a workable, non-linear television ecosystem that remains free to the viewer.
Posted by Martino Mingione at 05:46 PM | Comments (689) | TrackBackNovember 28, 2005
What we have here is a failure to communicate
The advertising business is in a transition that no one fully understands or controls. The advent of Internet Television and the Internet giants entering into video on demand, it is useful to see what each company is doing vis-a-vis traditional commercials.
Yahoo is a company loaded with executives from the media sector. Google is a company loaded with engineers. Here are two recent quotes from the companies as it pertains to television advertising.
“Advertising was not a business built by logic, and we don’t work by algorithm,” said Wenda Harris Millard, Yahoo’s chief sales officer. “Yes, we need to be more accountable, but that doesn’t mean you sacrifice art and creativity.”
Eric Schmidt acknowledges that as Google explores moving into television, it may well face a conflict between its core belief that advertising must be useful and the typical television commercial that is “based on feeling and emotion.”Posted by Martino Mingione at 08:32 AM | Comments (156) | TrackBack
November 25, 2005
Keep throwing spaghetti against the wall and see what sticks
Here are 3 ideas that marketers are trying to fight the ad-skipping technology built into our DVR's. I suppose of this list, the 5-second spot at the end of a commercial break makes the most sense. For the advertisers, that has a major limitation: there are only 4 to 6 of those in any given hour!
(excerpts from the Wall Street Journal)
... marketers are worried about new technology that allows viewers to zap through commercials. So they are pushing reluctant networks to rethink the age-old format of the ad-break -- known on Madison Avenue as a "pod."
Among the options: special "pod-puncher" ads -- blips as short as five seconds -- strategically positioned at the end of a commercial break to get more attention from viewers. At the other extreme, marketers are working on ads lasting several minutes, as well as groups of ads that mirror a program's theme.
... Selling individual premium positions, the networks have held, would complicate an already complex system.
... To get its five-second ad on the air -- the one appearing at the precious end of the pod -- AOL also had to buy 30- or 60-second spots to run in the same pods. ...
... Some ad firms are coming up with novel proposals for their clients. These include grouping several commercials together in a single pod to play off the theme of the program. For example, a rental-car company might band together with a hotel chain to air their ads together during a program about travel...
Other possibilities: running never-before-seen footage for a movie during an ad break, or showing multiple ads over several pods that add up to tell a single story ...
Posted by Martino Mingione at 12:01 AM | Comments (0) | TrackBackNovember 14, 2005
Connecting Dots
I was reading in AdAge about how ABC dropped 15% in weekly ratings after it began airing repeats of Desperate Housewives and Lost. This immediately reminded me of the recent Apple iPod announcement whereby viewers can pay $1.99 to download and view those same programs.
So, let's think about this. When consumers can watch reruns of those programs for free with convenience on their HDTV's, they stop watching in rather large numbers. But Steven Jobs is hoping that they will pay real money with some inconvenience to watch it on a small screen? I don't think so.
For anyone interested in why advertising is the mother's milk of the television business: the average cost of a 30-second spot in “Desperate Housewives” is $439,499, while the same ad in “Lost” costs buyers $333,166, according to Advertising Age’s fall pricing chart.
That's a lot of downloads.
Posted by Martino Mingione at 08:41 AM | Comments (286) | TrackBackNovember 03, 2005
Ads by Google
In the recent Time Warner financial report was this comment:
"AOL reported 16% higher operating income, as higher online advertising offset a continued decline in the traditional Internet-access business. Time Warner Cable showed the benefit of consumers switching to high-speed services with a 17% increase in operating income."
We should recall that 12% of Google's SEM revenue comes from its deal with AOL. If AOL's financials are that much improved from online advertising, then so is Google's.
September 23, 2005
It's All About the Inventory, Baby
One of the most ingenious things about Google's Adsense program was the result of easily adding so much more ad inventory for Google to sell. After all, Google's income comes from advertising and revenue is bounded in part by how much of it you can sell. I believe that we will continue to see innovative thinking like AdSense; expanding Google revenues even more.
I have not spent much time pretending to be a highly paid Googlian. But right off the top of my head I can see many new avenues opening up -- and none of them represent much of a departure from AdSense. Take local search for example.
I went into Google's Local Search and typed in a hunted for local pizza parlors. It predicably gave me a list of places along with phone numbers and a map. But which one to pick?
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If this were television, we might watch a 30-second commercial. Wait, why not let me click on a 'video' option and see the spot? Hmmmm, some believe that video is too difficult to produce and stream. I am not one of those people, but how about placing a link that shows advertiser photos!
Think about this: EBay is aquiring Skype in part to enhance revenues with some form of a pay per call business model. Google can do the exact same thing. But here is the kicker: it is not limited to loyal auction sellers to pay for that service -- its open to every business who wants customers and doing so through local search is very AdSense like.
Posted by Martino Mingione at 02:27 PM | Comments (10) | TrackBackSeptember 20, 2005
We are making a Living Hell for Television Advertisers
For those who might be contemplating how all these new ways of watching television complicate the process of advertising here is are excepts from Sean Carton thoughts at ClickZ:
Since the beginning of TV advertising, media buyers have had to consider only where and when to drop an ad... We're fast reaching a point where we'll also have to consider the where and when of the consumer's context...
But things are changing drastically. Video is a hot commodity on the Web, and shows such as "The Daily Show" are seen by more people online than on TV... New advances in portable digital video technology, brought about by cheap Flash RAM chips, allow more people to watch what they want, when and where they want.
... We shouldn't [be] thinking online video is just like TV except for the download times, smaller size, and shorter programming. The viewer context is totally different, and online video's capabilities allow us to do things that just aren't possible with TV.
... New technologies, such as Orb and Slingbox, allow people to watch their home TVs on the Web from wherever they are. Going across the country and don't want to miss your local news? Just hook up Slingbox to your TV, and tune in from your hotel room!
... Video may now be where audio was five years ago. And with rumors that Apple may be considering online video downloads in its iTunes store, video may catch up with audio sooner rather than later.
People are getting used to taking their media with them. ... As we work to consider the new place-shifted world, issues such as context become more important. You can't assume your ads will be seen by people at home. They could be at their desks (an assumption KFC makes with its new site), on the train, or stuck in traffic. Mobility makes a difference, as Europeans are finding out and mobile ad behavior studies show. We must be able to respond creatively to those differences. It's not just about what and where anymore.Posted by Martino Mingione at 10:50 AM | Comments (24) | TrackBack
September 09, 2005
Now, let's turn to Ed for commentary from his Lazy-boy
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Beginning today, CBS SportsLine will feature on its front page what it calls "TheEyebox," a video window that plays on-demand clips. The added online video content gives CBS more opportunities to sell 15-second, pre-roll video ads, which advertisers have been clamoring for, said Larry Kramer, president of CBS Digital Media.
The site will also add user-generated content in the form of blogs that provide color commentary on sporting events as they are taking place. CBS has dubbed these live game logs "glogs."
Kramer said the initiative was not meant to compete with cable channels like ESPN, but with other Web sites. He pointed out that advertisers on CBS SportsLine can reach users at work during the day better than cable can.
So, what are the bullet points from this story besides the obvious sports/video/broadband angle?
- Television and advertising go together like
politics and corruptionbaseball and hotdogs. With a few exceptions, people basically demand free access to content and they accept that commercials are the price that they pay. As the Internet becomes a viable distributor of television-like content, It is wrong to believe that anything will change other than the advertising formats. - The Internet is a viable television delivery mechanism. Fifty years ago there was 3 ‘broadcast’ networks over the airwaves. Next those signals where sent over cable buried under a community’s streets and hundreds of niche channels were added. The third distribution change occurred when satellite TV became economically viable. What really is interesting about the strategic significance of the Internet as a fourth conduit is that, similar to broadcast, it re-establishes a direct connection between the viewer and broadcast. It also creates that direct connection with the thought of a million channels (if that is the right word) available. It is no accident that it is CBS that is aggressively pushing Internet TV.
- Finally, the Internet is non-linear. This is different from the broadcast model and allows for different forms of content that are not feasible to air over broadcast. Witness CBS SportsLine’s mixture of content aired on TV, with video that did not make the edit, with user-generated glogs.
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CBS News is also in the Internet TV arena. |
September 08, 2005
Does 2 + 2 = 5?
Yesterday, OpenTV purchased CAM Systems for $19.5M in cash and stock.
More than most aquisitions, this one interests me because I was the President who built CAM from its failed roots into its current market share. I would have gladly tried to do it again for OpenTV for only a fraction of the $19.5 million!
So, why did OpenTV do it? We can only make guesses right now because Jim Chiddix's has not told outsiders what his grand strategy is. However, this should be noted: OpenTV now has two dominant products that might prove to be particularly effective together.
First, OpenTV has its middleware inside 50 million set top boxes. This provides for many possibilities, but interactive advertising is one of the most lucrative ones. Second, OpenTV now has the dominant market share in traffic and billing (T&B) enterprise software for local cable.
If these are put together correctly, a significant ad market could evolve that would increase revenues for Comcast and Time Warner, enriching OpenTV in the process.
Posted by Martino Mingione at 02:43 PM | Comments (41) | TrackBackAugust 17, 2005
Rentrak: a VOD company to keep an eye on
I have been watching a company called Rentrak (nasdaq:RENT) for a while. It is based in Oregon and in the information processing business. But why I watch it is that during the last year, they have been developing traction with a new product called OnDemand Essentials and this product is a video on demand play.
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Comcast has been in a year-long trial with Rentrak and last week decided to sign up for a multi-year contract. So, what’s the story here?
OnDemand Essentials integrates VOD usage data for the cable companies from their three VOD server vendors (Seachange, C-COR, and Concurrent); refreshing usage reports hourly. Examples being viewing volumes and trends. These reports can be viewed from the company’s web-based ASP service. I think that a third-party information provider is necessary in the equation because no one VOD server manufacturer will ever gain 100% of the market, nor will any of their competitors allow them access to their data. So, a company like Rentrak is needed.
OnDemand Essentials contributes no lasting revenue to Rentrak yet. The company is on a path to receiving $80M to $85M in gross revenue this year from their established businesses, particularly their PPT division and secondarily their Information Services Segment (ISS) division. Profits from those divisions go into subsidizing their “other” product lines which includes OnDemand Essentials. Eventually, when the product becomes a business, it will be moved into the ISS division.
Right now Rentrak’s OnDemand Essentials is trying to establish themselves with the cable MSO’s. Having Comcast gets them off to a good start. Also good is that Comcast's Spotlight advertising division is going to use Rentrak for their needs throughout the country. Rentrak has announced trial deployments of the service with Charter and Cablevision that should result in commercial deployments. The service is also used by some other small cable MSO’s and Mag Rack, a content provider owned by Cablevision.
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Rentrak does not really receive revenues from the cable companies, however. In the near future, the 300 some-odd content producers in North America and hundreds more in Europe would become subscribers to the reports. The final phase of customer acquisition would be the branded advertisers who will migrate to VOD advertising and need information for their campaigns.
After checking around with my contacts, I have heard generally good things. The OnDemand Essentials reports need more data elements in order to be really useful to advertisers. This will require work from the VOD server manufacturers, Rentrak itself, and more involvement from Comcast.
If the company is successful with their business model, they could become the information standard in VOD measurement. I would expect that they will expand to cover Internet TV, too. I don’t think you will see revenue from the OnDemand Essentials product until later in 2006.
Because Nielsen is so far behind in their VOD measurement products, Rentrak has a good shot here. Also, I like that Rentrak is aggregating all VOD data and not depending upon sampling. I do not
A side note: The gross revenue of the company is in the mid $80M range while the valuation of the entire company is only $100M. It is thinly traded at only about 25,000 shares per day, and that is up!
Posted by Martino Mingione at 11:35 AM | Comments (309) | TrackBackAugust 12, 2005
More Evidence of the coming Adpocalypse
I've reported here a number of instances of established media companies using the Internet to reach a new generation of viewers directly. Just about everyone of them says that getting advertising revenue is part of their goal.
In addition to AOL announcement that it will become a non-subscription based, video portal seeking advertising dollars and the AP's announcement to offer ad supported video on the Internet, these are just a few of the many recent stories:
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ABC & CNN are putting news segments on Yahoo! News. |
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CBS now eyes Internet VOD. |
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Nickelodeon Cartoons on Demand. |
So, a logical question is this: how large is that market now? AccuStream iMedia Research forecasts that ad revenue for online video will reach $321 million this year, up 75 percent from 2004.
Meanwhile, ClickZ reports that more agencies are looking both inside and out to find talent to bridge the gap between offline video and online rich media.
MarketingVOX reports that Mike Griffin, VP of business development at EyeWonder, says that nearly 80 percent of video ads that the firm sees are made by repurposing television ads. Another 15 percent use existing video content, edited to fit online. Only 5 percent of online video ads are created entirely for the Web. The trend is shifting, as more advertisers begin to realize the power of video ads, he said.
For about a year or so, Jupiter Research has been forecasting that online video advertising will hit $657 million in 2009.
Posted by Martino Mingione at 10:58 AM | Comments (490) | TrackBackAugust 10, 2005
Atlas Financials
aQuantive is one of only two companies that I am aware of that will battle for the agency desk top buying software in the upcoming video on demand advertising sector. Since I project that it will grow faster than online advertising after 2007, this is an interesting thing to watch.
(except from ClickZ)
Atlas, aQuantive's digital marketing technologies division, had revenue of $22.5 million, compared with $14.4 million in Q2 2004. During the quarter, Atlas entered the digital television space with Atlas On Demand. Since then, it has established partnerships with video on demand providers SeaChange and C-COR. Profitability for Atlas On Demand would not be immediate, said CEO/President Brian McAndrews.
Posted by Martino Mingione at 02:03 PM | Comments (0) | TrackBack