Audience Growth, Repurposing TV Ads to Drive Online Video Spending

The rapid growth of broadband penetration is expanding the potential for delivering rich media and streaming video applications to consumers, creating new opportunities for advertising online. But the real growth in broadband video advertising is not likely to occur until big brand advertisers begin using their offline media budgets to repurpose TV commercials online, predicted JupiterResearch analyst, Nate Elliott.

According to Jupiter Research, online video ad spending is expected to quadruple by 2009, from $121 million in 2004, to $657 million.

Aside from a growing audience, Elliott noted that by earmarking part of their TV ad budgets toward repurposing TV spots online, marketers will drive further growth and enhance awareness for the video platform. He said that collaborating online and offline planning units will refine the process over time.

Elliott singled out proprietary formats as a deterrent to the widespread deployment of video advertising. Proprietary formats, he noted, will inhibit progress because every Web site cannot accomodate every technology provider's format.

Elliott said when interactive agencies use formats like EyeBlaster instead of "open" formats they end up limiting the number of sites that can accept their clients' video ads. "It's just video," he said. "You don't need something special [to run it]. [Marketers could] easily use standard tools."

However, according to the new research, the No. 1 deterrent for advertisers who buy rich and streaming media, is still audience size. Thirty-eight percent of marketers said they don't buy video inventory because the audience is too small, 27 percent say the price is too high, 21 percent say they are too unfamiliar with the format, 19 percent say the publisher offering isn't attractive enough, and 14 percent cite poor picture quality.

According to Elliott, the contention that the video audience is too small is something of a misnomer. JupiterResearch data shows that nearly a quarter of the U.S. Internet audience (24 percent) has access to video, a number that will escalate to 42 percent by 2009.

Elliott noted that several high-traffic Web sites that offer streaming video technologies enjoy a sizable number of impressions. Both ESPN.com and MSN receive over 30 million video streams per month, which he noted doesn't exactly translate to "Friends" or "ER"-caliber numbers, "but it's Oprah," he said.

Overall, Elliott said that Web publishers aim too low by not selling streaming and rich media spots in exchange for premium content. According to a Jupiter 2003 consumer survey, 14 percent of consumers said they would be willing to pay to avoid ads online, 66 percent were unwilling, and 27 percent were undecided.

"This means," Elliott said, "that when consumers do pay, they're not paying to get rid of ads, they're paying for content." In other words, as long as the content is good, consumers don't care about whether you put ads in front of them, and publishers would be smart to take note of that.

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