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RSSI recently sat on a panel where a big topic of discussion was: Can we reach television-sized audiences using online video? The answer is, unequivocally, yes. However, it became clear that most digital media buyers do not think about the world in terms of television size audiences -- and most television media buyers only speak the language of television.
If the online ad industry wants to facilitate the process of moving television budgets online, then it is time to package inventory in ways that television buyers understand. Otherwise, the only big television budgets that can be expected to move online will be bundled in the upfronts. In the U.K., television buyers purchase the majority of online video advertising and they have comparable metrics across both mediums. I'd like to welcome everyone to the age of what I'll call: the Internet Gross Ratings Point, or iGRP.
Online advertising buyers and vendors understand metrics such as reach and frequency, but often don't even use these metrics. The mere mention of ratings, GRPs or dayparts, however, often draw inquisitive stares. I'd like to explore a recent online video campaign to demonstrate how it could be packaged for a television buyer -- and likely lead to an increased budget.
-- Typical Internet Video Proposal --
Advertiser: Electronics Manufacturer
Target: Men, 25-54
Media: Online Video Advertising (Pre-roll)
Impressions: 15,000,000
CPM: $22
Cost: $330,000
As is typical with online video buys today, there is no apparent connection between the size of the audience an advertiser is trying to reach and the size of the actual campaign. Furthermore, most media buyers don't frequency cap their campaigns, which results in overexposure for a limited set of consumers and a lack of exposure for the majority of the target audience.
Online video offers the best of both worlds: measurable performance coupled with massive audience aggregation. Why not leverage the strengths of the medium and package it in a way that the bigger buyers understand?
-- Internet Video Package for TV Buyer -
Advertiser: Electronics Manufacturer
Target: Men, 25-54
Media: Online Video Advertising (Pre-roll)
Audience Size: 22,500,000
(Publisher or Ad Network) Net Reach: 37%
Frequency: 4
Using the package above, we are able to calculate the Internet Gross Ratings Points (iGRPs).
(Net Reach) * (Frequency) = iGRPs
iGRPs: 150
Impressions: 33,600,000
CPM: $20
Cost: $672,000
In order to maximize the reach and frequency of the campaign for the best possible cost, the factors at stake should be determining the appropriate reach and frequency numbers for the campaign, and the right sites for distribution. Clearly, there is a strong argument for increasing the budget, as low reach or frequency metrics will likely not hit the core campaign goals. In addition, there are several toggles that can be worked with in regards to price -- from site quality, campaign duration to audience targeting.
For more advanced buyers, targeting should focus on dayparts, much like television. Limiting a campaign to a daypart significantly reduces the total audience size and will likely impact the reach of the publisher or ad network. Since reach percentage impacts the iGRP rating and the audience size impacts total cost, the packages will need to be explored in greater detail. The important fact here is that an ad network can use television metrics and package inventory in a way that makes sense to the TV buyer.
In conclusion, what this analysis demonstrates is that once the campaign is live, publishers and ad networks can optimize performance -- which, ultimately, is the most powerful and unique advantage of the Internet medium.
Correction: Yesterday's Video Insider initially blasted with an outdated company name for the author's affiliation. As now listed on the Video Insider blog, Murgesh Navar's firm is VoloMedia, NOT PodBridge.
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Problem is the current model is really geared for the Fortune 2000 company and leaves the little guy/gal--average guy/gal--or company with under 500 empoyees--without viable options that fit their budget.
According to the SBC when defining "small companies," of which there are currently about 25 million in the U.S., it is a company with personnnel less than 500. I would personally include midsize companies in this description which leaves about 20,000 large companies in the U.S. that can really afford $200k to $600k monthly video advertising campaigns. What's the small to mid size company going to be able to afford?
As with www.hotpluto.com and a few other similar (but not so similar) companies out there, there are other efforts that can reach targeted audiences across the U.S. and virtually around the world--and at a fixed monthly budget that is pennies on the dollar compared to the CPM model.
Why does the Internet have to follow the television industry? The access to the Internet, the mobility and the reach creates more opportunities than television ever will. Time to get creative and look at other models. This may not make the industry as a whole happy about spending less and getting more but creating opportunites where there are few, can bring in a substantial volume the advertising industry has not been able to take advantage of to date.
My 2cents....
For the time being, the old-schoolers have bigger checkbooks, and unless they DO pour money into broadband, its growth curve will be flatter than necessary.
So good on ya for furthering the cause.
In all, I didn't come with the answer, and your idea is certainly a step in the right direction, however I think online video requires a different valuation technique than television because its viewed different, viewer measurement is different, and ads are run different.