• by May 28, 2002

Streaming Portal Sales by Ken Liebeskind, MediaPost Staff Writer The major portals are now streaming a significant amount of advertising into their entertainment areas, with the advertising sold by both the portals and the content providers, who usually share the revenue.

Mondo Media, which sends eight animated shows to Yahoo and MSN, sells its own advertising, with the portals selling ads, too. Revenue is generally, but not always, shared. Jonathon Marlow, Mondo’s director of business development, says both Yahoo and MSN sell gateway ads that appear before Mondo’s animations start. Mondo also sells its own ad package that includes an instream ad during each show and static ads that surround the screen throughout the show. Marlow contrasts the ads, saying, “portal ads are like TV and ours are like a sponsorship. There’s a different feel for the viewer.”

“The portals share ad dollars with us,” he says. “In most cases we share our dollars with affiliates, but not with Windows Media.” According to Marlow, Windows Media hasn’t wanted to share revenue with content providers, because “they weren’t convinced there was a lot of money there and thought it would be too complicated.” But that situation may change. “After the American Pie campaign, they will be more interested in it,” he says. Meanwhile, Mondo shares revenue with its affiliates, “because it gives them an interest in making the content successful,” Marlow says.

AdventureTV.com, which provides outdoor adventure content to the portals, doesn’t sell its own advertising. Yahoo and MSN sell gateways that play in front of AdventureTV streams and “split the revenue with us,” says John Davies, AdventureTV’s president. He says there are “various levels of splits,” but 50/50 is the average. But he says Yahoo pays a smaller share. “Windows Media is not as money-driven as Yahoo and wants to support content providers, while Yahoo is looking at it more as a profit center,” he says. Windows Media also uses some of its own content and sells ads for it, while Yahoo doesn’t play its own content, relying solely on outside providers, he says.

Nada Usina, senior manager of entertainment and broadcast at Yahoo, says, “In most cases, Yahoo sells the ads. It varies depending on the agreement. We have hundreds of content providers and they’re all different.” Another reason Yahoo sells most of the advertising is that it has an experienced national sales force, unlike most of the content providers, she says.

Answering questions by email, a spokesperson for MSN said, “MSN manages the sale of advertising for the MSN network to assist advertisers.” This comment may be true, but doesn’t account for the fact that some content providers, like Mondo, also sell their own advertising.

Email Convergence or Conversion? by Susan Breslow Sardone, Contributing Writer Despite the fact that not a single piece of commercial mail has been shown to carry anthrax, and the number of tainted letters is low, the public has become leery of unexpected packages. According to an online survey conducted at the end of October by PlanetFeedback, 25% of consumers are not opening direct mail as a result of the recent threats. To counteract this, Forrester Research recommends marketers focus on email programs [see “Behind the Numbers,” p. 42].

In contrast to those findings, the Direct Marketing Association (DMA), the trade group representing the $582-billion industry, recently issued a white paper that stated response rates have not been affected by the anthrax scare. Yet the same document acknowledged, “Some firms…report increasing reliance on email marketing…to help offset some of the projected losses from potential drops in response rates from direct mail campaigns.” Additionally, the DMA encouraged members to “utilize an email or telemarketing campaign in conjunction with a letter drop to notify consumers that mail will be coming.” Once-wary competitors, email and printed direct mail advertising are edging closer to one another following the postal anthrax outbreak. If these newfound allies haven’t exactly vaulted across the digital divide and embraced yet, they have at least shaken hands and acknowledged their common goals.

While the convergence of email and printed direct mail would appear a logical evolution, there are major obstacles to that happening soon. “Having email addresses for typically only 30% to 40% of their customer base, even the most sophisticated marketers will not be able to quickly shift their direct mail efforts to email,” Forrester warns.

To expedite things, the Council for Responsible Email, a coalition of email service bureaus, list providers, and marketers, has created a committee to support direct mailers in appending email addresses to their mailing list files. Accomplishing this goal will not be simple or inexpensive, though. While Forrester recommends these marketers “encourage consumers to receive their emails by gathering email addresses at all customer touchpoints,” other tactics—including postcard requests and capturing email address via customer service or telemarketing agents—will also be necessary.

Even with a robust email database, marketers will find translating a message from direct mail into email still poses problems: The email format isn’t tactile, like a beautiful catalog, or portable without a device. More disconcerting is the spam glut. By 2006, the average user will receive 1,400 spam messages a year, according to a Jupiter Media Metrix study. Forrester has noted that many recipients have trouble distinguishing between spam and opt-in email.

DMA chief executive H. Robert Wientzen believes “email is growing as a marketing tool, but it will grow as an additional channel, not as the only channel. I don’t think that email will ever fully replace direct mail.” Perhaps he’s right. For now, though, email marketing firms are enjoying heightened interest from new and existing customers. And as long as response rates between the two media are similar, direct marketers who experience email’s cost efficiencies, targeting abilities, and speed of delivery for the first time may become lifelong converts.

Wireless Targeting Teens by Adam Bernard, MediaPost Staff Writer Quite a few things have been happening this past month in world of wireless, and they all point to the same group: Teens. Sometimes they get ignored when it comes to wireless; recently, however, this market is being explored.

YourMobile, a global wireless entertainment provider that delivers ringtones and graphics to more than 12 million wireless consumers in 85 countries, launched its partnership with music marketing company Fanscape with a wireless campaign promoting the October 16th release of Lit’s new album, Atomic. The campaign involves a ringtone produced from the song “Lipstick & Bruises.” Although new musical releases by top recording artists are regularly marketed via wireless in Europe and Japan, the Lit campaign is one of the first to promote a major recording artist through wireless media in the United States.

Continuing on a musical note, Nokia is set to release its new 5510 mobile phone, and it apparently resembles nothing seen before. The 5510 includes a digital music player, 64 MB of memory, a stereo FM radio, games, and enhanced messaging capabilities, and it has a full keyboard. The device falls within a new entertainment category Nokia has set up, and it is the first device the company is marketing for “mobile entertainment” within that category.

Here’s another incentive for teens to pick up a wireless product: Ashley Power’s teen website Goosehead.com is taking its teen-magnet audience wireless via PocketBoxOffice. Goosehead has attracted attention from People magazine, The New York Times, CNN, PrimeTime Thursday, Time magazine, and Vanity Fair—along with investment from Academy Award-winning actor Richard Dreyfuss and development deals with MGM Television Entertainment and NBC. Through its partnership with PocketBoxOffice, Goosehead.com’s content is now available to teen mobile users everywhere. Backpacks and books? Nah—for teens today, it’s all about wireless.

iTV Ad-Zapping by Jessica Patton, MediaPost Staff Writer For some new-media ad folks, “ad-zapping” conjures up one of those summertime mosquito-killers with the high-pitched buzz—and their career is the mosquito. For others, it steels their creative resolve; the logic goes that if ads are properly targeted and engaging, people will be compelled to watch, no matter the ad-blocking gizmo at hand. And in iTV-land, at hand it finally is—in the form of the ReplayTV 4000, the first DVR (Digital Video Recorder) with commercial-deleting capability, due in stores by press time.

But that may be on pause, as the parent company of ReplayTV, SONICblue Inc., was recently zapped, er, slapped with a lawsuit by the three major networks and their affiliates, who allege that its ReplayTV 4000 violates the Copyright Act, the Communications Act, and California law.

The ReplayTV 4000 comes in four models with recording capacities of 40-, 80-, 160-, and 320 hours. Unlike a VCR, the device records TV shows onto a hard drive rather than a tape. It is networked and broadband-enabled, and connects to a cable modem or DSL for fast transferring of video programs over broadband. Raising the networks’ litigious hackles is the “Auto Skip” feature, which allows users to delete ads in TV broadcasts. The lawsuit claims that the devices “enable, assist, and induce” users to make unauthorized copies of copyrighted TV programs sans commercials. Andy Wolfe, CTO of SONICblue, says the devices simply use technology to “make it easier for people to do things they are already doing anyway.” Because ad zapping can only be done when a show is being watched on a delayed basis, users must still choose whether to skip commercials or not.

If TiVo and Lexus have their way (think steely creative resolve), viewers will not only watch commercials but also seek them out. The iTV service and the luxury-car maker have teamed up to create a sweepstakes, with a new Lexus ES 300 as the prize, that encourages TiVo subscribers to watch a series of four commercials for contest clues. The concept actually incorporates DVR technology: Viewers use the slow-motion, rewind, and fast-forward functions to scour the commercial for the answers to questions posed on TiVo’s Showcase screen.

“Advertisers have been concerned that viewers would use the technology to skip commercials, but Lexus has chosen to work with TiVo in order to be in the forefront of creating content and determining the potential opportunities of a new, and conceivably explosive, technology,” says Lexus VP of Marketing Mike Wells.

And if that doesn’t mute the ominous ad-zapping buzz, read on: Expanse Networks announced it has filed a patent application covering its ADhance technology for DVRs. When viewers choose to fast-forward through commercials, ADhance shows either a brief marketing message related to the advertisement or a condensed version of the advertisement itself. Expanse chairman Dr. Charles Eldering says, “[The networks’ lawsuit] indicates the lengths to which content providers will go to protect their advertising interests. New technologies are needed to give consumers convenient digital features without eroding content value.”