• by Adam Gerber , Scott Meyer , June 1, 2007

We need to develop the right ad models and we need them now

There's a parallel universe out there. While linear TV has maintained its "lean back and watch" viewing characteristics, Web-based video content has evolved on a fairly detached, and increasingly "interactive-rich," path. What's causing this divergence? On one side, legacy business models and a lack of standardized digital distribution have hampered TV's evolution. On the other, the industry needs to address Web-based consumer control expectations and the fact that the Web provides a new environment for Internet video - an environment without barriers.

But the long-awaited convergence is starting to happen. As distribution and device connectivity evolves, consumers are adopting new viewing habits. And, as this reality grows in scale over the next decade, convergence will alter the discussion of how publishers and marketers build scalable and useful ad models.

As an online publisher and an Internet video technology company, we've been closely evaluating opportunities for advertisers to take advantage of this medium.

So far, we've seen that the success of linear TV on the Web has been modest. Despite the online followings of March Madness or episodes of TV programs such as "The Office," the average person still spends more time on his/her couch watching traditional TV.

Now, due to the capabilities of digital TV and the Internet, shifting the time and location of content plus the ability to skip ads, consumers have the potential for more control than ever over their TV-watching experience. While these innovations appear to be a setback for TV advertising, they also offer opportunity.

So when will the model flip? It will start once traditional TV programmers can push content to any Internet-enabled device, and when those producers who have focused only on Web-based content distribution to the pc can push directly to the TV and mobile devices. Once that happens, debates about the appropriate ad model for Web video will change dramatically.

Combined with the flexibility and two-way nature of digital distribution, advertisers will soon have a much larger pool of content through which to reach their key consumers and will be able to apply new forms of targeting. But most importantly, with video content flowing to multiple devices, advertisers will broaden their definition of "TV" to mean all things video.

Some agencies and clients are already well on their way to making this change. And they are beginning to recognize that the creative and messaging strategy employed through their video communications will have to be customized based on the device and viewing location individual viewers use. That Coca-Cola ad on the mobile phone will be different than the ad on TV, and both will be different from the ad integrated into short clips on the Web.

Also, all of the targeting the Internet lets advertisers do today can be opened up to accommodate video. Combined with changes in pricing, the result will be a transformation of the types of creative and programs that advertisers will need to offer to be successful. Money will be spent on many different sites, instead of just the top four television networks.

So, who's going to win? Those who understand where the industry is moving will have a clear advantage in reaching consumers and therefore monetizing video. Simply repurposing content and advertising is not the answer. If history is any indication, those companies that are able to adapt their business models and invest in technology now will have a clear advantage over the competition, who will be struggling to catch up.