Is Local Online Video Advertising Going To Win over TV?

As consumers begin to watch less TV on a linear, predetermined schedule, advertisers (many of whom are beginning to grow weary watching their high-dollar ad buys being lost to DVR-induced ad skipping) are shifting portions of their ad budgets toward the Internet.

It only makes sense that content, audience, and advertising are shifting to online. Given the virtually unlimited reach of broadband, Internet TV Programmers have what amounts to a global distribution conduit for their content; a vast improvement over Broadcast and Cable Networks who can only offer their programming within geographically-specific service areas.

Thus, the battle between broadband video and TV heats up.

David Verklin, CEO of Canoe Ventures (an alliance between the six largest cable companies in the U.S.) says, "We [the cable companies] get it. We're not Luddites, we're not asleep at the switch. We have 18-year-olds. We get it." In a matter of weeks, Canoe will be launching its first product for local addressability and interactivity for the television marketplace -- the beginnings of the "holy grail" for local advertisers. However, for a local small-to-medium sized business (SMB), when it comes to online or traditional broadcast advertising, I think the jury is still out.



As an SMB, do you have access to in-stream ad-spots on YouTube, Hulu, and Veoh? Not really. For now these companies are still catering to national advertisers because their monetization models are still upside-down. Companies like Jivox are attempting to provide hyper-local advertising to SMBs. But they do this by playing video ad-spots, "video-mercials", on local websites rather than in-stream pre-rolls and overlays within relevant content. There's the promise of recently announced Google TV Ads Online, where advertisers can target specific shows, and ads will show up whether they're being broadcast on television or on the web. But this service is still in beta.

As an SMB, do you have access to affordable localized TV spots? Well, Spot Runner has stopping pitching its services to local businesses. After its third layoff, it will only sell ad-spots to national advertisers. That leaves Google TV. You can select from a number of professionals who can handle the entire ad creation process for as little as $80. Then you set your daily budget and max CPM to air on TV programs featuring content that's relevant to your business. But you still do not have the addressability, interactivity, and measurability of Internet video. Even David Verklin will admit, "If we [cable TV] rolled out addressable advertising for 60 million households tomorrow, the agencies wouldn't know how to buy it... and the metrics companies wouldn't know how to measure it."

Lets fast-forward and assume that the SMB had similar access to addressable and measurable advertising for both online and broadcast audiences, how would they compare in reach? According to Nielsen's "Three Screen Report" the average American in 2008 watched more than 151 hours of TV a month, up 3.6% from the 145 in 2007. This compares to the average online video viewer watching some three hours' worth of content on the web per month. Do the math: all online video views combined (including YouTube) is still half only the increase in TV viewing from 2007 to 2008.

Will online video advertising win over TV for small businesses? It's still much too early to even predict.

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