• by April 14, 2009

A recent Knowledge Networks study shows that use of network-produced video increased to over a third (37%) of online users -- up by more than a quarter over the previous year (27%). And that should come as no surprise, given the amount of content TV networks are now offering online.

But these users of online video come in two distinct types, with very different online habits -- and different potential value to advertisers.

These types are viewers of streaming video, and those who download video for viewing later on their laptop or iPod. The proportion of online users who said they had downloaded network-produced video has remained constant year-to-year at 11%, now less than a third of streamers. But, in contrast to streamers, downloaders have greater exposure to and acceptance of advertising.

A vast majority (80%) of downloaders in 2008 said they were willing to watch ads in return for free downloads -- up strongly from two thirds the previous year. By contrast, 68% of streamers stop watching when pre-roll advertising comes on.

As most downloaders are also streamers, their exposure to "free" ad-supported video in the streaming world seems to be causing them some cognitive dissonance when in the downloading world. Why, for instance, should they only be able to get "Lost" by paying iTunes $1.99 when they can watch it for free by streaming?

Another aspect of downloaders' pay-avoidance (as opposed to ad avoidance) came in another study we did last year, that established that almost a quarter of regular downloaders have downloaded pirated video.

Why should advertisers and marketers care? First off, despite their tech-forward stance, downloaders do tend to be more "ad friendly" than streamers -- for instance, they are more likely to agree that ads on their favorite TV programs are relevant to them, and they are more inclined to buy from companies that advertise on their favorite programs.

And, compared with streamers of network video, downloaders are more cutting-edge in the use of media technology: although equally likely to use a DVR as streamers, downloaders tend to be more likely to have invested in newer equipment (HDTV and iPods), and to use new services. This slice of the market is always difficult to reach, but this could offer a prime option to add to the marketing mix.

In this economy, we must assume that consumers will be ever-more tempted to seek out lower- or no-cost alternatives to video to which they may already feel a sense of entitlement. And herein lies the rub - where pay avoidance could lead to ad avoidance, also.

These insights about downloaders reveal the potential opportunity awaiting brands willing to offer their prospects free video downloads. The transient nature of streaming video (view on the fly, with no option to save) contrasts with the persistent nature of downloaded video (saved locally for permanent anytime access) -- creating an opportunity for a consumer benefit and a brand message that also has the potential to persist in saved content.

And, when it comes to downloaders, being persistent as an advertiser may indeed pay off.