Monday, May 14, 2012, 10:24 AM ET|Posted by Will Richmond
As this week's TV advertising upfronts kick-off, the inconvenient truth of live TV viewing's ongoing decline should be on the minds of everyone in the ecosystem. The days of forcing viewers to tolerate almost a minute of advertising for every two minutes of TV programming they viewed are fading. With DVRs now approaching 50% of American homes, viewers are more in control than ever, and live viewing's decline will accelerate. One bit of good news for both TV networks and advertisers is that online video advertising is maturing in time to help. Following are 4 reasons why online video advertising's appeal should grow:
First and foremost, online video advertising offers networks and advertisers the advantage of no ad-skipping by the viewer. True, some viewers flip over to other apps when an online video ad break occurs, but at least, they can't simply skip entirely, as they can with DVRs. And because most online streams come with fewer ads, viewers are more likely to be a little more tolerant of those that do show up.
Online also restores a measure of ad control to networks and advertisers. Last week, when DISH announced its "Auto Hop" feature that automatically skips past ads in recorded broadcast programs it was the latest reminder of how pay-TV distributors have been able to tilt the playing field against networks and advertisers (after all, pay-TV operators' aggressive marketing of DVRs has created tens of millions of ad-skippers!). With online distribution, the TV network is able to set the ad policy - how many, what type, how often, etc. YouTube's "True View" format, which allows viewers to proactively close ads, is a great example of a network's individual ability to optimize its ad experience.
Better targeting and analytics
For years, savvy online publishers and advertisers have used multiple targeting tools to reach desired audiences. The same dynamic is now coming to online video advertising, creating dramatic new opportunities to increase the value of individual ads. Along with improved targeting comes increased transparency, as advertisers get better insights about critical metrics such as profiles of who viewed the ad, for how long, what they did with it, etc. There's a learning curve to make all this new data understandable and useful, but as that happens, the value in online video advertising will increase.
More creativity and engagement
Because the Internet is an active medium, unlike TV, which is passive, online video advertising offers substantial new creative freedom to engage viewers. That means advertising can move from the realm of just generating impressions (and hoping some downstream behavior is induced) to the realm of interaction. Online advertising is a new creative canvas that should unleash a whole new era of viewer engagement. If done right, this would lead to a better ROI, as well as a more satisfying viewer experience.
Now to be fair, it's still very early days for online video advertising. For TV networks, there are till genuine measurement issues which will take time to resolve. There is still a lot of friction in the buying process, and many agencies are not yet well set up to capitalize on online video advertising. Importantly, despite billions of monthly views, it's still hard for advertisers to achieve reach objectives while maintaining quality of context. Nonetheless, as these issues get addressed, and as live viewing continues to decline, TV networks would be wise to tap into online video advertising as fully as possible.
(Note - we'll be delving into all of this at the VideoNuze Online Video Advertising Summit on Tues, June 19th in NYC. Early-bird discounted registration is available now.)