Will Consumers Pay To Watch Ads?

When the major consumer ISPs began to announce that use of their broadband services would be metered, the mainstream and trade press warned: "Bandwidth hogs, beware."   But it's really publishers and marketers who should be wary.

In Beaumont, Texas, where Time Warner Cable initially began to "trial" metered usage nearly a year ago, Multichannel News  reported that the caps would be tested between 5-40GB per month. Think that sounds like more than you'd ever use? Today one of the most popular downloads in the XBOX Live Marketplace is a movie called  "Eagle Eye" --  which, downloaded in HD, is 5GB.  You can see the problem.

As the ISPs expand metering to other markets, they insist that the metering of usage is to prevent those so-called "bandwidth hogs" from slowing down the works for everyone. Indeed, we've all experienced frustration at work when our email attachment takes forever to send because "that guy" is watching the latest viral video at his desk. And we're all well aware of the very real damage done to the entertainment industry caused by those who traffic in pirated content.

At home, I have an insanely good connection. In the nearly three years I've lived at the same address, Time Warner Cable's RoadRunner service hasn't so much as hiccupped once. Were I so inclined, I could pull down "Eagle Eye" from my XBOX and begin watching it in seconds. However, if I lived in a market with a usage cap as low as 40GB, after watching an average of two movies a week each month, the meter would start running and I'd be paying by the bit.

Much has been written about the perceived conflict of interest in metering. It costs me nothing beyond my monthly subscription to watch "Eagle Eye" on cable TV, but it could cost me as much as $1 per GB to watch it via a non-cable operator owned source, such as XBOX Live, PlayStation, Netflix or iTunes.

Largely missing from the conversation, however, is a discussion of the chilling effect that broadband caps could have on digital advertising. Marketers have come to count on the greatly enhanced consumer attention, recall and interaction that all forms of broadband video advertising offer. Publishers rely on the strong and growing revenue stream that video ads bring them.

We know that running a great :15 spot prior to user-selected content is an excellent way to communicate with an engaged, forward-leaning user. But what happens when, because his usage is being metered, the user is actually paying to see the marketer's ad?

All members of the interactive advertising value chain must act now to ensure that the growth of video advertising is not stymied by users rejecting the idea that they are effectively paying to be pitched. This is the time for ISPs to understand that giving consumers choices when it comes to where and how they consume video will ultimately strengthen their businesses. Operators have a right and responsibility to effectively manage their networks, but also to ensure a fair experience for all of their customers.



4 comments about "Will Consumers Pay To Watch Ads?".
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  1. Mark Walker, February 16, 2009 at 2:23 p.m.

    They already do pay to watch ads, and we call it Cable TV!

  2. Michael Carney from The Media Counsel, February 16, 2009 at 2:23 p.m.

    You raise a reasonable concern, Lewis. However over here in New Zealand our internet usage is (and always has been) metered -- it's a small market, with limited competition, fixed costs are high, our telcos are rapacious, yada yada yada.

    Even so, we don't blame advertisers for their contribution to our access costs, largely because the arrival of the bill is disconnected from the access experience. We're more likely to rage at the telcos and ISPs for their greed than ask the advertisers "is this fat, fat download really necessary?"

    Perhaps if every page element had a post-it tag identifying its contribution to download charges ("this 'look at me' self-indulgent video will cost you a dollar to watch") we might have a different point of view ... however that doesn't happen. Otherwise we all might have to think twice about the evils we inflict on our poor long-suffering customers.

  3. David Peterson harvey from The Hidden Art, February 16, 2009 at 3:59 p.m.

    Comcast has sent warnings to customers who exceed 100 GB a month usage, threatening to discontinue their service, if I remember the article I read correctly.

    David Peterson Harvey
    Managing Director

  4. Matt Ellsworth from FLMSC Inc., February 16, 2009 at 4:44 p.m.

    I re-read my time warner agreement and it states that they reserve the right to limit usage based on either a rate limit or a set amount per month.

    I called them up to ask what it was - and they told me that it is limited by the rate and I am free to use the connection at full throttle.

    So I have a 15-20mbit downstream and 1 mbit upstream connection that apparently I'm allowed to use at peak capacity.

    So far I have found their statement to be true - and hopefully it will stay that way.

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