• by January 29, 2003

Cross-media deals — even huge cross-media deals — are here to stay, at least according to Viacom’s new executive in charge of cross-media. “At Viacom, it’s now not a matter of if cross-platform, it’s a question of when,” says Lisa McCarthy, senior VP of Viacom Plus. Indeed, Viacom has spent billions of dollars in the past five years building a multimedia giant, capped by its June 2000 purchase of CBS, Inc. Today, it bills roughly $1 billion in cross-media sales, stretching from its TV and cable assets to outdoor and radio, plus its Blockbuster Video stores. The result is that Viacom is taking a bigger share of the advertising marketplace. “We’re getting more money. In every single deal we have gotten more volume,” says McCarthy.

When Viacom Plus broke ground in May 2001 with its first-of-its-kind $300 million cross-platform deal with Procter & Gamble, it was the sole player in the multimedia game. Today, ABC/Disney, AOL Time Warner, Clear Channel, and others have formed organizations charged with selling advertisers a spectrum of media. The result, says Mediacom EVP/director of national and local broadcast Donna Speciale, is a better bottom line for buyers. “These were not formed to be cheaper. When Viacom Plus was formed, that was not the reason Mel Karmazin put all his assets together. It has become all about that, though, because now there is more competition.”

That is critical, says Zenith Media EVP/director of local media Bonita LeFlore, because clients are more bottom-line-focused than ever. “If a proposal doesn’t have a return on investment on it, we can’t even look at it.”

While Time, Inc., and America Online have been exploring cross-platform ad deals under the AOL Time Warner umbrella, the conglomerate’s Global Marketing Solutions unit was formed especially to push deals on a larger scale — including with media outside AOLTW. “This is a market in transformation. As you look around the media landscape, ratings, readers, and users are harder than ever to get to,” observes GMS president Michael Kelly. “The slam-dunk media deals are no longer available, and advertisers are looking at new ideas.” Among the upsides, says Kelly, is that advertisers are moving money that was once in the marketing budget to advertising.

With that shift, however, comes more work for agencies that are designed for a more traditional model of planning and buying. All that added work is less about choice and more about necessity, according to Clear Channel Advantage senior VP Lori Wellinghoff, who says advertisers’ mission of connecting with consumers has become more complicated. “I think cross-platform is making it easier,” she says. “When you have a consumer that is active, distracted, jaded, diverse, you can’t just buy a national television spot and have that be as effective. It may be cost-effective, but it’s just not that simple any more.” Clear Channel Advantage, with a large stable of radio and outdoor assets, among others, aims to push itself as the outside-the-home cross-platform shop — so much so that it’s trademarked the phrase “Gone from home.”

Online
Net Aids Offline Branding
by Masha Geller, masha@mediapost.com

One of the most notable events in the online advertising industry recently was the release of Online Publishers Association research data that indicates that users of branded media websites are more likely to read, watch or listen to those same media brands offline.

"There is a strong inclination among online media consumers to also engage with the offline property," said Michael Zimbalist, executive director of the OPA. "In addition, the online and offline components of a media brand are synergistic in that they reach their audiences during different times of the day. This suggests that advertisers who communicate through offline media brands can achieve greater impact by adding an online component from the corresponding websites into their media plan."

OPA reports that among almost 5,000 Internet users aged 14+, 56% indicated that they are more likely to read, watch or listen to the offline component of the brand. Furthermore, those users with high affinity toward a particular media website are even more likely to watch the companion network or read the companion publication (66%), versus only 23% of low affinity users. The research also found that users of Special Interest (70%) and Sports (60%) sites are particularly likely to translate into offline readers/viewers/listeners of the corresponding brand.

Additionally, OPA research indicated that online media sites introduce valuable new consumers to the overall media brand and are a highly effective and efficient channel for driving print subscriptions. For example, as of September, NYTimes.com had generated more than 58,000 credit card subscriptions to The New York Times, USATODAY.com was the #2 source of new subscriptions for USA TODAY in 2002, and approximately 10% of all new subscriptions to The Washington Post are driven by washingtonpost.com.

Online media sites also increase sampling of companion TV networks, the OPA says. According to a recent MSNBC.com survey conducted by MarketFacts, 31% of MSNBC.com users said that they are more likely to watch MSNBC cable news, vs. 19% who said they are less likely. Media sites are also effective at driving viewers to programming. In April 2001, ESPN surveyed 4,961 visitors to ESPN.com the weekend of the NFL Draft. More than half (52%) of the respondents indicated that the information on ESPN.com made them more likely to tune in to the Draft on ESPN/ESPN2. Streaming Media
PBS Teams With Virage
by John Gaffney, john@mediapost.com

Virage and PBS have a new deal that is still carrying the torch for quality streamed programming. “As the economy regains strength and IT budgets improve, a renewed commitment to infrastructure build-out is expected, “ says Virage director of product marketing Jeff Kames. “Thus, the rollout of more video-related communication should prevail.”

And as that infrastructure continues to roll out, the opportunity to attract sponsors and advertisers will improve, according to Kames. His company provides infrastructure and marketing advice to dozens of websites. PBS has been a client since 2000. Virage was selected to help PBS bring The NewsHour with Jim Lehrer program to PBS.org. To date, Virage has processed more than 500 television episodes of The NewsHour. Following this successful launch, PBS and Virage worked together to launch three more series — Julia Child: Lessons with Master Chefs, PBS Mathline, and Scientific American Frontiers. In 2002, PBS and Virage launched three additional programs including American Field Guide, PBS Teacherline, and Washington Week.

PBS is using a tool called VS Publishing, which provides content processing services and hosting. After episodes of each program are aired, the television content is encoded and indexed through the Virage SmartEncode™ process, and delivered to PBS.org. End-users can search for specific topics by categories, keywords and series for a personalized viewing experience.

“The online advertising market appears to be regaining some strength, especially as an adjunct revenue strategy to subscriptions. The Virage VS Publishing solution provides a comprehensive workflow for inserting online streaming or banner ads, which incorporates content from the content owners,” Kames said

ITV
Cable Operators Are Pro VOD
by Lee Hall, lee@deadlinemedia.net

While cable operators continue to toy with fully interactive television, they are moving forward quickly with on-demand services, offering consumers at least the basics of interactivity.

“As we look at iTV, the focus really should be on video-on-demand [VOD] and making that as successful as possible,” says Bruce Leichtman, an industry analyst in Durham, N.H. By Leichtman’s count, more than 10 million cabled HH have access to VOD. This should double within a few months. However, cable companies aren’t helping matters by varying widely in the way they introduce and promote VOD in their respective markets. While some operators see on-demand as an extension of pay-per-view — i.e., charging the consumer for each use — others, like industry giant Comcast Corp., offer the service essentially free to anyone who subscribes to a digital cable package. Rather than viewing VOD as a huge moneymaker, Comcast considers it more of a defensive tactic against satellite providers that have siphoned away millions of would-be cable customers.

“From a competitive standpoint, VOD will go a long way toward enabling us to keep current customers and win back some we may have lost to satellite over time,” says Andy Addis, vice president of marketing and new products. Comcast in December introduced VOD with a bang into its mammoth Philadelphia cluster, and plans to roll it out this year to millions of households the company just acquired in its merger with AT&T Broadband.

Cable operators cannot ignore the revenue possibilities of a successful VOD launch. A recent study by the Yankee Group, a Boston research firm, suggests that the industry could rake in $2.6 billion annually from VOD by 2006. RCN Corp., which competes against Comcast in Philadelphia, has found that its customers love VOD and buy three times as many on-demand movies as they do with standard pay-per-view offerings.

Leichtman warns, however, that the cable guys should not read VOD’s early success as a clear path to riches. It’s going to take some smart marketing to maintain interest.

“The worst thing for people in the industry to think is that this is a ‘gimme,’” he says. Piling on additional choices to a program lineup already crowded with as many as 200 channels only muddies the water. If VOD is going to become a long-term success, cable operators are going to have to back it up with a lot more support than they gave the once novel pay-per-view concept. “Pay-per-view was an afterthought for most of them, a placeholder for events and adult [programming],” Leichtman says. “If they devote the same level of spending and marketing to VOD that they did to pay-per-view, they will miss a great opportunity.