'I Am Going After TV Budgets'

NOTE: Before we get started, just a few words about Google's mobile announcement: Froogle, Google Checkout, Orkut.

I am still waiting for those "category killers" to smite even a single competitor and "game change" anything. So until I see a handset with this operating system on it and until I see a major U.S. carrier that actually agrees to let it on their phones and networks, I have only those three words to say. I will defer to my colleague Mark Walsh's excellent roundup of expert weight-ins on Online Media Daily
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Moving onto another unproven mobile media model... video.

Rhythm New Media CEO Ujjal Kohli was in a bold mood when I spoke with him recently about a new rollout of mobile video in the U.K. "I am going after TV budgets," he told me. Many years ago, I recall sitting in iVillage CEO Doug McCormick's office being told the exact same thing. He made the case for the Web's superiority over TV in targeting, day-parts, etc. and I recall raising an eyebrow at his audacity in hoping to steal money from network and cable as early as 2000.

Now I know a little better, and the staggering embrace of online video, our sheer hunger for video content of all kinds, has shaken some of my early doubts about mobile video. The idea that there will be certain kinds of news, information and entertainment content in video form that people will want to access on a cell phone is now in the realm of imagination. I don't do it yet myself, and I don't know anyone else who does, but now I see a likely path to mobile video viewing becoming habitual. And at the same time, it is clear that mobile viewing will rob some mindshare from both TV and online. I don't know if it is time yet to walk into a brand manager's office and carve out a piece of the prime-time budget, but at some point in five or six years we may see mobile at that same point online video is now -- nibbling at TV.

Kohli makes one of the first cogent arguments I have heard for media buyers to make this shift. First mobile allows for sharper targeting even than online video. Six months into a program of serving ads into video on the U.K. 3 network, Rhythm says it can determine a recipient's age, gender and whether they have seen the ad before in real time, so that the network can dynamically serve the right spot into the pre-roll slot.

Frequency capping is another strength of mobile, he argues, because TV buys tend to carpet-bomb viewers for effectiveness, and as mobile presents a total share of voice in an uncluttered environment where people are actively looking for video. And of course, there is no DVR-effect on mobile. You can't fast-forward past an ad, and unlike the Web, there is no room to do what I usually do during pre-rolls, click away to another open window or do an email check until the pitch is over. Kohli says that as a result of all these advantages over TV and even the Web,  "our CPMs average five times television and more than two and a half times the Internet, and with a much smaller screen."

On the 3 network, Rhythm has already run campaigns for Axe, Microsoft, Cisco and Mazda.

Of course, without scale, none of the arguments for the superiority of mobile video advertising matter much at all. With so few users willing to pay for video services that a lot of them forget to use it anyway, the only way this medium works is if something gooses user adoption.

Frankly, there is only one way mobile video achieves scale: going free. Let the carriers fiddle with their bundling schemes all they want, whether it is aggregating their own little walled garden of select clips (VCast) or pay-per-channel silliness I see in Sprint TV ($4.95 a month for Maxim TV -- please!). This medium needs to be free, and Rhythm's 3 launch shows why. This is nice-to-have content, not must-have content. More to the point, the two major video models that preceded mobile, TV and Web video, are free to use. In some people's minds cable TV is a matter of content bundling along the same lines as a VCast or MobiTV, but I beg to differ. Most consumers are not buying content bundles in their minds. They are buying access, and that is the way mobile has to go. I may pay something extra each month for data access generally, but paying specifically for video on mobile is a recipe for keeping the platform in the same early adopter niche video-on-demand occupied for years, before free and ad-supported models opened it up for people to try.

The most encouraging news from Rhythm's six-month run is the importance of free. The mobile video is a completely no-cost, ad-supported set of video clips. In fact, the system even picks up the tab for data charges. Rhythm is both serving the ads and aggregating the content for the carrier. The effect of a free service with ads has been impressive. According to Kohli, of the 4 million subscribers to the carrier, 1 million are registered for the video service.  

I have not seen the 3/Rhythm programming, so I can't attest to its quality, whether it is at all compelling. Nor can I say anything about the frequency or regularity with which those 1 million registered users actually access the service. As I have said here before, I am still skeptical about early mobile numbers, because I remember hearing in 1999 metrics like 30% of users had "accessed rich media." Grabbing 25% of the available audience in six months is impressive nonetheless, and it bespeaks the power of an ad-supported, genuinely free model to get people to see whether a new platform fits into their lives.

Everything else is just noise. Yes, mobile is a bit different from the Web, in that it has a built-in micropayment system for easy charging, and there are real incremental costs for carriers who stream video. Tough. Carriers should stop whining about their special circumstances. If they want to be media companies, then start acting like the media I as a consumer am used to getting. Trying to squeeze monthly fees for channels or from video-specific bundles on mobile is no different from the years of CNN trying in vain to charge for Pipeline and NYTTimes.com keeping its premium columnists behind the TimesSelect wall.

Give it up. Knock it off. Make video a standard pact of a data package and start building ad-supported models around it. Consumers, publishers and media buyers need a consistent, singular model. Give it a few years and then maybe we can walk into that brand manager's office and make the final argument, the killer argument, the one that Web video is starting to make credibly: this is where the eyeballs have moved.    

Tags: mobile
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