Sandy's Impact On Ad Biz -- And A Charitable Suggestion

In the wake of hurricane Sandy, Pivotal Research Group’s senior research analyst Brian Wieser lowered its U.S. ad forecast to a 0.5% decline in the third quarter, a 1.4% decline in the fourth quarter, and zero growth for the full year.

When all’s said and done, that will translate to a reduction of about $500 million in lost revenue, due to “interruptions in local TV and radio programming and also factoring in decision-making by media buyers in the wake of the storm,” writes Rupal Parekh, reporting on Pivotal Research Group’s projections.

What’s the impact, if any, on online video? There are factors holding back ad revenue growth in our industry and Sandy’s probably not one of them.

With Sandy knocking out everything south of 34th Avenue, that’s a plausible loss of spending.  I  thought it was a shame because Sandy also prevented the advertising community to raise money for the recovery.  Then it hit me. See the last item below for my suggestion on how to combine charity with effective video ads.

Is Ad Skipping A Disaster or a Godsend?

(To be clear: I’m not suggesting that ad skipping is a disaster on par with real disasters.)

YouTube allows viewers to skip ads,  andother sites are joining the trend. According to YouTube, last summer, 30% of viewers saw ads while 70% skipped them.  It’s worth noting that YouTube charges marketers a premium when that 30% does watch as ad.

Now don’t me wrong.I’ve long admitted that as a viewer, I can’t stand pre-rolls.  This is exacerbated by the usually crappy creative that marketers provide for unassuming viewers.  Now, bad creative is one thing, but what I find funnier is the hubris of the industry in thinking that viewers would somehow welcome ads. The average viewer doesn’t care about a marketers’ message in a pre-roll.  Don’t forget, if viewers really sought out a marketer’s message, they’d see it in a search engine advertisement after a search query (a form of pull advertising).  The entire premise of push advertising (what a pre-roll is) is that marketers need to reach out and greet consumer who are not proactively seeking marketers’ products or services.

Remember Hulu?

A year ago, Hulu was getting accolades for letting viewers choose which ad they wanted to see.  The practice is intuitive, but the model may be flawed and doomed to fail. 

If viewers wants to see a marketer’s ad, over time those marketers will be conditioned into thinking they don’t need to advertise, so they will spend a bit less thinking that they can make it up with earned media instead.  As a result, the ads that are increasingly shown are the very same ones that were skipped (because the undesirable ads will have to overcompensate with more spending, and there’s a finite amount of sellable impressions).  If Hulu is paid to repeat the same ads a viewer rejected, the model breaks down. Just read the comments section of Hulu’s post if you doubt me.

Watch For Charity?

In the wake of Sandy, I wondered: why not encourage viewers to watch ads to benefit charitable causes that either the publisher, advertiser or viewer (the trifecta) can choose? I’m not talking about PSA ads, I am suggesting a percentage of the ad revenue would go to a charity if ads are enabled and watched. 

It’s one thing to compensate viewers to watch ads -- that is a recipe for click fraud -- but if the trifecta can independently or together choose charities, then perhaps pre-roll advertising becomes a bit more effective.

Or maybe I’ve completely lost my marbles.  What do you think?

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3 comments about "Sandy's Impact On Ad Biz -- And A Charitable Suggestion".
  1. Brad Stewart from Adjoy , November 5, 2012 at 3:11 p.m.
    Hi Ashkan. This suggestion is one that is not without challenges, but that certainly does have benefits and potential. We've developed a video platform specifically for this purpose, which incentivizes like/shares/views on the basis of third party donations. We have had some really encouraging small-scale success, and are hoping to start a trend, enabling users, sponsors, and charities to work together! Keep up the great writing, by the way. Your level of insight into online video is mind-boggling. Cheers, Brad.
  2. Ashkan Karbasfrooshan from watchmojo.com , November 5, 2012 at 3:13 p.m.
    Thanks for the very kind words Brad, I appreciate it (you'll be receiving your payment soon ;) - just kidding... but now, I have no choice but say: I'll check out Adjoy!
  3. Ashkan Karbasfrooshan from watchmojo.com , November 5, 2012 at 5:19 p.m.
    Yikes - 34th street, not Avenue! Sorry.