Streaming: Big Year Ahead

by Ken Liebeskind, Dec 18, 2002, 12:00 AM

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The growth of streaming advertising will continue, with '03 promising to be the biggest year ever, according to streaming advertising providers, publishers, and agencies.

Executives MEDIA spoke with report major growth in '02 that will continue this year. Mike Griffin, senior vice president of sales and marketing at EyeWonder, a provider that streams TV commercials online, reports triple-digit growth in late '02 that will accelerate in '03. Recently reached agreements with Yahoo! and AOL to sell EyeWonder to advertisers are a major reason for the growth. They bring the advertising to tens of millions viewers within a few days, which makes the buy much more attractive, Griffin says.

Chris Young, president of Klipmart, which also streams TV commercials, reports double-digit growth in Q4 '02, attributing it to repeat business in a few categories. "Three segments have embraced streaming," he says. "The film industry, automotive, and video games. As '03 progresses, other advertisers will embrace it."

Among the publishers who are reporting and projecting major growth is The FeedRoom, which streams TV news broadcasts across a network of 108 sites. Ad volume grew 400% last year, according to CEO Jon Klein, with the company developing a proprietary format that inserts ads into a central screen with clickable tiles on the left. Klein attributes the growth to an audience that is increasing by 100,000 per week, with a 16% penetration for residential broadband, according to reports. "Agencies need to know we get something back for the spending, and we derive enough data to assure them it's a better spend than banners and TV because the same spot is measurable," he says. Ninety-six percent of viewers watch entire Flash ads and 80% watch entire video ads that precede content.

Chas Edwards, CNET's vice president of business development for the broadcast/broadband division, says the company has had a lot of success with narrowcasting, including webcasting programs that are seen by small audiences but attract advertisers eager to reach them. CNET streams five-second billboard ads at the beginning of a webcast with a company logo and a mention as a sponsor. After the first segment of the program, a TV commercial is streamed. The programs are ideal for advertisers who "want to reach a specific audience of early adopters," Edwards says.

On the agency side, Jeff Lanctot, director of media at Avenue A, says, "In '02 we saw streaming media emerge as a staple of online campaigns, and it will continue in '03. More clients are making it standard and a few providers have figured out how to standardize things." He mentions Unicast as the leader in standardizing streaming formats, including file sizes and distinct product offerings. The standardization makes it easier for the advertising to be bought and played by publishers.

The downside for streaming growth in '03 is the lingering Internet ad recession, which has "outpaced the support for advertising," according to Edwards. "High CPM advertising needs high sell-through rates to support the hosting costs of broadband streaming, which has caused a conflict." Lanctot notes an additional downside: the fact that viewers don't always like to see streaming ads. "The challenge is not to offend or aggregate consumers, so we need to think about frequency caps," he says.

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