• by Diane Mermigas , March 2, 2009

From the start, the Walt Disney Co. has taken a very different approach to managing and marketing its online video strategy, building on the appeal of its core Disney, espn and abc brands across all platforms and devices. While the content and context are different, the sites offer consistency in an unpredictable, interactive marketplace.

Albert Cheng, executive vice president of digital media for the Disney-abc Television Group, recently spoke with Diane Mermigas about what's ahead.

Is there a new model for television online?
The new model is ip-delivered content. It's a hodgepodge because tech has different standards. By next year there will be a lot of consumer electronics devices that are Internet-enabled. Content still rules, but the distribution will evolve to the point where targetability and addressability to match the right advertisers to the right person, or group of people, will happen in a more seamless way. At some point it won't matter where or what device you're getting your content from. It's going to wind up on the same screen.

Explain your online video strategy.
We are ABC wherever you go - online or on tv.

How are you creating a metric panel that fortifies your position online and leverages it onto mobile?
The research we are doing on brand messages indicates that brand awareness, revenues and other measures in our indexes are much higher when ads are both on tv and online. All of this is evolving, and we're trying to figure out how best to put it together. If you are talking about mobile video, we're still very early. There is possibly enough scale in display and mobile Web to make it interesting.

With everyone jumping into video downloads, are you giving away too much of that business?
Online, the value of viewer revenue per episode per hour is our benchmark. The amount of money charged for downloads is good relative to what we're earning on the broadcast network. We look at the revenue per viewer, understanding that not everyone is going to be able to afford, or will want to pay for, an episode. The video world of the future is going to be very fragmented. We're looking at people who will want to pay for it and have complete control of it, and who don't want to pay for it and will stream it. Some want to watch on tv or on some other device. One of our criteria for partnering is whether it allows us to get to consumers in some way we cannot on our own.

What special challenges do you face?
We need to make sure we remain nimble as a company and that we make the right technology investments, like the right infrastructure to support targeting.

What is your international expansion?
Most of our work with tv partners is where brand becomes a tougher issue because the ABC brand (unlike Disney and espn) doesn't go beyond the United States.

What balance do you seek between original and archived content?
There is room for everything. It's a matter of revenue versus cost. I think there will always be some original content that is breakthrough. A lot of it can be concentrated on the long tail, so for a big company to spend management time on a few narrowly focused projects does not make as much sense. You really want to put your muscle and build up your infrastructure to hit a few more home runs with webisodes off of well-known larger properties - like Ugly Betty and Desperate Housewives - to become a driver of viewer engagement.

How do you grow online video advertising in tough times?
We are targeting groups of people, not individuals. So, there are still a lot of business processes that need to be developed to figure out how we best deliver that value to the advertiser.

How does the Adlab you established in Austin, Texas, generate useful information?
It helps. The Adlab is the start of probably a longer look of how things might work. All of our experiments have been about ad models and how consumers respond to them. We know that interactivity brings a high level of recall. What we haven't figured out is what sales process works best for hyper-targeting. We come up with things we can do with the existing ad model that get us closer to measuring roi.
For advertisers looking for a generally targeted platform with a good return, then we are that option. They allocate some of their budget beyond tv to create brand awareness. Research has shown that if you have the same message online and on tv, you will get higher returns.

Many believe the big interactive payoff will come when advertisers can leverage the social and e-commerce aspects of the digital spectrum. Do you agree, and how are you doing that?
We're one of the few media companies open to adopting a corporate e-face with Gannett. We're working on open social. We do think there is a larger opportunity connecting to larger social networks like Facebook and MySpace. We want to figure out how to tie into the existing fabric of the social Internet. We don't want to create a walled garden; we want our communities and sites to be seamless to the social Internet.

How will you leverage that?
By building a customer relationship and managing the infrastructure. For us, crm and its use are the critical things we're looking at. The more information you have about the people who go to your sites, the better. That is social for us; it means driving your customer relationships and data on the people you know are coming to you. We know this will have direct field implications in the future, but first we need to build a base. Profiles are the easiest way to do it because people are reluctant to register unless something is relevant to them.
Tying into Facebook and other social networks doesn't mean we can necessarily monetize our content, because open social activity is going to be more monetizable in our branded environments. What is most monetizable is the social activity around our branded content anywhere. We are working in partnership with companies like Watercooler, where we power their content - and those are great advertising platforms.

Does that preclude you from distributing content through major alliances with the likes of hulu.com?
We have no problem with the product, which is great.
The business processes, and the way we monetize our content is usually what makes it difficult. Hulu has a very specific online format and purpose. We look at our network more broadly, which is ABC brands across multiple platforms - not only online but tv, our own and our partners' networks.

What should the industry do to push the envelope during these difficult economic times?
There needs to be real focus on the availability [of] content across platforms with a sliding-scale business model. Consumers historically have always made a choice between how much they are willing to pay out of their pocket and how much they are willing to pay in other ways, whether it is watching commercials or paying monthly subscriptions or one-time fees. What we haven't seen to date is a really great example of the entire spectrum of choices for consumers in one central place, and letting them pick and choose. Now consumers have to find what they want first, and then shop around for the options. Over time it will make a lot more sense if distributors get into the business of making consumer choice easier and more convenient.

What does it take to get there?
The conventional wisdom used to be that consumers made program choices when they sat down to watch something on television. Now we know that people were not so much making a program choice as a platform choice - they were generally sitting down to watch tv. Being able to store what you want to watch and play it back when, where and how you want has changed consumer behavior.
There eventually will be services offering one-stop shopping for consumers with a flexible business model that allows for access and pricing at the same time when the consumer initiates the process. Today, that choice is made by content aggregators like YouTube, Apple and Amazon. But it could be a great opportunity for Hulu. People who have built really great streaming, downloading and commerce infrastructures are in a great position. Hulu doesn't have the infrastructure that Amazon does, which makes it a force to be reckoned with as this comes together. Amazon has the social recommendations and the cloud, and many of the necessary pieces. What they don't have is the advertising and subscriptions.

So, what in a nutshell is Job No. 1?
Everybody has bits and pieces of the puzzle today, but it makes the consumer work too hard and think so hard about what they want to do. That's what television used to do for consumers. It used to be you would sit down to watch tv, flip around, and even if you could not find anything you liked, it was somehow okay. Now consumers can select what they want but they have to find it first. There is going to be a lot of innovation over the next couple of years in the area of discovery - not search - to help consumers find stuff. Although some companies do that well, the field of discovery is sort of wide open. You can see elements of discovery at YouTube, Blinx and Hulu. But what consumers really need is something that feels like they are in control, but you're still really holding their hand.
In a recession, people are much more careful and tend to invest in existing technology and consumer bases. You cannot afford not to invest in the future, so we continue to collaborate with other industry players on short- and long-term solutions, and to talk to consumers.

What have you gleaned from those conversations?
There is a sense that people are willing to do a lot more than we give them credit for. A year ago, the so-called experts told us that consumers generally would not watch content on their computers or their cell phones. Now, that clearly is not so.

Do you expect any of these developments in the next 12 months?
Over the next 12 months, I don't think there are any surprises. Video playback features are rapidly becoming a gotta-have on phones, the way text messaging and cameras are standard.
These portable platforms are really great for short-form video when consumers are standing in line for lunch, or waiting for someone to show up for an appointment. Mobile will be an incredible platform going forward. Most companies see it as just another place to distribute what they have. The issue is how we get people hooked enough on mobile to consume more content there that they can transfer and finish viewing on other platforms and devices at a later time. The focus has to be on user interface and adding value.