Commentary

The PC Will Not Beat the TV For Video Ad Dollars

by Dave Morgan , Featured Contributor, February 4, 2010

A lot of people believe that just because a growing number of folks are using their laptops and PCs to watch video, the day will come when advertising support for video on the computer screen will rival or pass video on the television screen. I am not one of those folks. Video on the PC will never beat video on the TV for ad dollars. Here's why:

Screens and environment matter. All video is not the same. Where, how and on what device you watch it, not to mention whom you watch it with, matters a lot. Watching video on a laptop alone while sitting in an airport is a very different experience from watching video with three friends on a 60-inch high-definition screen with Surround Sound in your living room. Both could be online, and both could have degrees of interactivity, but those factors create very different experiences for viewers and advertisers.

TV screens deliver more sensual impact. A large TV screen in a living room, bedroom or entertainment room delivers more sight, sound and motion impact than a 17-inch screen on your lap. While PCs can now deliver very satisfactory media experiences, you can't compare them to what large screens deliver today. It matters. The big screen, with its "lean-back" viewing experience, creates a very different sensual experience. More than four decades ago, Marshall McLuhan told us that "the medium is the message." It is still true. More sensual impact on TV means more brand and message impact and more money per ad.

More ad tolerance. TV viewers are more tolerant of advertising today than computer video viewers. Like it or not, rational or not, this is the reality. I suspect it stems from the higher degree of control that computer video viewers and their "lean-forward" viewing express, relative to the more passive approach of those watching big-screen televisions, frequently with others. More ad tolerance on TV means more ads, and more money.

Usage. Video consumption on computers is growing, but it is still tiny relative to video consumption on TV. In fact, the amount of time that people in the U.S. spend watching live television is still growing. Considering the amount of time-shifted, rented and Internet video that viewers are consuming today on TVs, it's clear that TV will be the dominant video usage platform for a long, long time.

Big head start. U.S. annual ad spend on television today is 66 times bigger than on computer video -- $66 billion to $1 billion. To close that gap, computer video advertising would have to grow at a very big rate year-over-year for a long time, and TV ad spend would have to decline substantially year-over-year for a long time. Given the fact that TV consumer usage has not lost share to the Internet, unlike TV's media brethren of newspapers, magazines and radio, I'm willing to bet on television's dominance for at least a couple decades to come.

What do you think? Will advertising spend on computer video ever surpass TV?

tv, video

24 comments about "The PC Will Not Beat the TV For Video Ad Dollars".

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Rob Mottola from east2west media group, inc., February 4, 2010 at 2:20 p.m.
the key for online video is technological advancement in delivering the content to the living room TV...
as bandwidth, fiber and all of the high-end engineering systems continue to improve and provide better quality video, the opportunity to view internet content via a click on your living room remote control is not far off...thats when the advertising numbers and viewing patterns you mention in the article will change...
Reply

Diane Politi from Reel Centric, February 4, 2010 at 2:38 p.m.

All good points, Dave.

As one who works in the online video space, my vantage point is not one of eclipsing television viewership, but rather looking to improve online advertising ROI with video enhancement.

For example, Cars.com research from fall of 2009 reports that 52% of consumers who have viewed an online video advertisement have taken some sort of action, and that boiled down to 12% of them actually buying a vehicle.

And here's a great quote from Larry Pryg, National Marketing Manager, GM Certified, "Video is exploding…and dealer inventory that features video is two times more likely to generate phone calls or e-mails from prospective shoppers vs. inventory without video.”

I believe the important distinction is the way the video is presented to the consumer. If they are already looking for a car, and can view a video about that actual car, they are able to make a buying decision before every going into the dealership. On the other hand, a pre-roll that has to be viewed prior to the consumer reaching the content they're after is viewed as "intrusive", rather than helpful. Especially if it's just a :30 sec tv commercial that's been repurposed for the web.

Will advertising spend on computer video ever surpass TV? Not anytime soon. But in the meantime, you can't help but love those growth rates!

Marti Resteghini, February 4, 2010 at 2:51 p.m.

I agree. Where you watch video matters.

What this doesn't take into consideration is that "internet" video is everywhere. Though not as pervasive right now, you can watch it on your computer, or your big screen tv, or your phone. Eventually your "television" connection and your "internet" connection will be one in the same. When that happens, advertisers will be poised to spend against the content, not the delivery format.

Jason Winkel from Blakely + Company, February 4, 2010 at 3:48 p.m.

Rob has it right. We won't be seeing internet video surpassing TV as much as a melding of the two. Personally, I already have a "media" computer plugged into my TV, which we use to watch online content (Hulu, Youtube, etc). We use it like any set-top box, and will eventually run nearly all our video (DVD's, OTA, cable/dish, etc) through it. With gaming consoles and HTPC's providing households with internet-to-TV capabilities, technology is already bringing the two closer together.

There is still a large gap in lap/desktop and living room viewing, though. Audiences have been trained to control their own online experience while sacrificing that control while sitting on the couch. We "watch" TV and "surf" the internet. That difference in behavior will likely continue to drive the type of advertising the viewer deems appropriate.

That's before segmenting online video into its various forms - each having their own attached behaviors, settings, and expectations: quick "funny" clips, long-form entertainment, short info, and embedded advertising on it's own, to name a few.

Dave Morgan from Simulmedia, February 4, 2010 at 4:13 p.m.

Great comments. Thanks. However, to be clear, my point is that the computer won't beat the TV, not that "Internet" video won't be very successful. I suspect that much of the video consumed on TV's in 5-10 years will come from the Internet. However, the TV as a device and way of watching will continue to dominate over PC's as devices and ways of watching, and as platforms for premium advertising.

Jonathan Mirow from BroadbandVideo, Inc., February 4, 2010 at 4:16 p.m.

A lot of this chatter would suggest that "internet" TV and "broadcast" TV are essentially the same thing. I couldn't disagree more. Your livingroom embraces the watching part of your brain while your PC engages the participation part of your brain. You cannot interact with classic TV programming - but interaction is what internet TV is all about. We spend a lot of time in this space (shameless plug alert): to see the fundimental difference in action, tune into www.medicinalmarijuana.tv tonight at 7pm MDT (Denver Time). You'll see people doing things that you can't do on traditional TV (other than the subject matter) such as participating in live discussions and joining in from remote locations over the web wiht video.

Ron Stitt from Fox Television Stations, February 4, 2010 at 4:16 p.m.

Dave, I certainly don't disagree with you. As others here are suggesting though, I still tend to think that we will start to approach a point where the distinction between "TV" and "PC/Online" will cease to have much meaning. What will persist, though, are different modalities of viewing (live vs. on-demand, long-form vs. short-form, linear vs. interactive, passive vs. lean-forward, etc.). Due to advances in technology, these distinctions will be driven mainly by behavioral and sociological forces as opposed to device limitations in the future, and programmers/marketers will have to continue to understand and cater to these various modalities.

Dave Morgan from Simulmedia, February 4, 2010 at 4:22 p.m.

I don't disagree that Internet TV will be different thank classic living room TV. It will be better. My point, is that the power and value of ads will be different and still better when they are on the bigger screen, whether they are interactive or passive, and that the PC/laptop as a viewing platform will always have a tough time competing there.

Of course, where we are probably all in violent agreement is that video advertising will be big - on all platforms - and Internet-driven video is going to make all platforms better - both PC and TV.

Robin Jewsbury from Alibro, February 4, 2010 at 4:24 p.m.

I think Jason has it right - it's about everything coming together. That box in the corner of the room will show all sorts of media from video, games, apps and information. It all going online in one way or another and with that you get better ad targetting and everyone gains from that. There is a more fundamental change going on than the article implies.

Neal Bell from White Rock Media, LLC, February 4, 2010 at 4:32 p.m.

I push back on the assertion that TV viewers are more tolerant of advertising. Viewers with a remote control in their hand, constantly bounce around the channels. Watching Hulu, on the other hand, forces them to sit through the ad because:

1) They know there is only one ad unit.
2) If they "surf" over to another web page (tabbed browser envrionment), they might miss some of the video content they want to see.

I believe the future monetization of online content is creating a new version of an old formula (time = money). The formula will be time = money = information.

Some people will sit through lots of ads to access content, because time is all they have to give. Some will pay for the privilege of avoiding advertising. And some will offer some information about themselves - allowing for more targeted (hopefully relevant) messages to be delivered (but at a lower rate of incidence.)

Nelson Yuen from Stereotypical Mid Sized Services Corp., February 4, 2010 at 4:43 p.m.

Rob, Jason,

Not that you need more support but I think you're right too. Marketers that bother to make a distinction between "video" on TV vs PC isn't talking about user preference or what people are more/less likely to adopt.

What we really should be discussing is the paradigm shift that is occurring with how people CONSUME VIDEO - and advertising.

My humble 2 cents; we should all stop making a distinction between PC and TV because it's the internet's infrastructure and technology that is hindering a PC from BEING a TV. (And it's not that far behind.)

If you harp on the negatives of watching a UFC fight on a computer screen, what you are really saying is that "the coaxial cable that goes to my tv right now is slightly faster." You can reverse this argument and say "I prefer to watch House episodes on my computer because I can pick and choose an episode and I don't have to sit through commercials"

These are all just characteristics relevant to the platform NOW. That doesn't mean there will be a distinction in the future. It's short sighted to keep thinking of these things as two separate mediums of delivering video content. They are just rectangles with screens that can play video.

Nelson Yuen from Stereotypical Mid Sized Services Corp., February 4, 2010 at 4:46 p.m.

FYI, I have to disagree with the notion that ads will be better on TV just because the screen is bigger. Not only are publishers in a better position to distribute more RELEVANT ads to viewers but publishers also have the capability to send ads WHEN viewers are MOST RECEPTIVE of them.

BTW. My laptop is hooked up to my Television screen.... I do not own a PC monitor.

Bruce Klopfenstein from Univ of Georgia, February 4, 2010 at 5 p.m.

Two decades is simply too large of a forecasting horizon. I'm not sure anyone knows where we will be in 2030. What this article seems to miss is that technologies like IPTV are coming that will help make the differences between the viewing experiences of watching net-generated video content versus the traditional TV viewing experience becoming less and less pronounced. If a TV viewer at home can just as easily and perhaps more inexpensively get the same and better content on that large HDTV display, he or she will. What needs to be learned from newspapers, magazines, and the music recording industry is that they were too slow to react to the train coming down the tracks.

Anytime, anywhere video is on the way. Today's youngsters are also tomorrow's "on demand" viewers. And where will Microsoft, Google, and Apple, to name a few, be in the video delivery business 5 years from now, let alone 20? Then there are the seemingly limitless number of smaller entrepreneurs who may simply stumble upon the "next great way" to present video content.

While I agree it's wise to understand that the broadcast model still dominates the video consumption model for now, take a look at the DVD industry to see how quickly things can change. Finally, cable and broadcast program providers are reaching the limits of commercial saturation. Check commercial avoidance in DVR replayed shows to get a better idea of where the audience is already going. It's certainly a topic worthy of discussion.

Paula Lynn from Who Else Unlimited, February 4, 2010 at 7:19 p.m.

As usual, you are right. Along with the above commentators, no one seems to mention that a main reason there has been such an increase of computer and computerish video watching is opportunity that was not there before. Airports, standing in line or just waiting for anything anywhere for in between activities add usage. Along with the aforementioned reasons, eventually the balance will steady.

Stanford Crane from NewGuard Entertainment Corp, February 4, 2010 at 7:47 p.m.

Screen size? Dave what about all the big-screen TV's with the internet interface already built in? Some good points though.

Riccardo Polizzy carbonelli from KlausTech Inc., February 5, 2010 at 9:49 a.m.

Video on the PC will never beat video on the TV for ad dollars...

~ correct “if” pictured today but will definitely change as soon as the online will be able to adopt the same TV brand metrics and by doing so the big TV budgets will have same sort of accountability.
Screens and environment matter....

~ true, watching content trough TV or PC is different “but” the distinction is not based around the hardware/device used but the content. New TV can now surf the web, store programs connect wireless to any other media device . What makes the difference is the type of content you are consuming. If accessing TV content, a passive action, or an interactive online environment. It’s easy to stop a TV show using a TV break but becomes challenging when this is done when you are directly interacting with the content however, there are ways this can be done with max benefits from both sides viewers/users and advertisers. The fact that when on TV we are called “viewers” while on the web “users” it implicitly indicates that the viewing behavior is a more passive condition then when “using” a web content.

TV screens deliver more sensual impact....
~ true “but” we can also say that TV can’t deliver a one to one message….it might be less sexy and less glamorous but the effectiveness can be recovered by addressing the ad message to a more targeted user meaning less waste and a better audience acceptance.

More ad tolerance on TV....
~ true, it’s a passive behavior, viewers don’t get as much bothered when interrupted …but again it all depends mainly on how the webpage shows an ad and there are creative and technological solutions out there that can be of help.

Usage. Video consumption on computers is growing, but it is still tiny relative to video consumption on TV....
~ it is not the Video that will bring the TV bdgs to the online but the “audience”!! Of course Video will look better when seen on TV but the quantity of interactive content and service available on the web will have the capacity of attract relevant audience .

Big head start. U.S. annual ad spend on television today is 66 times bigger than on computer video. ....
~ of course, this is still happening today because TV can prove the full value of “all” their audience by selling reach and frequency while the online has been concentrated only in proving the value of the last mile wrongfully hiding to the advertiser that to win a race you need to have a good start an excellent race speed average and a winning end. The lack of brand metrics have narrowed the race view to the last mile but it won’t take 20 years for this to change, online publisher won’t survive, they are paying for the content and they need to

Terry Heaton from Reinvent21, February 5, 2010 at 12:08 p.m.

Dave - You note there's a difference between watching TV and watching video online. How true. I've found that TV viewing has created a whole new set of habits built around commercial breaks. I go to the bathroom. I get snacks. I check email. I channel surf. These, I find, do not exist when watching video online. What am I going to do?

David Queamante from UM/Identity, February 5, 2010 at 3:23 p.m.

Probably true, but what about when TVs begin to function more like PCs? I can already watch Hulu, Netflix and Youtube on both of my primary TVs at home. Once more households can do this, will there be a distinction anymore?

Richard Monihan, February 5, 2010 at 5:55 p.m.

I have to disagree with the idea that online video will never beat TV. There are several reasons why online video lags, but none are insurmountable. Interestingly, almost none of the reasons match with those listed above.

1. Ad unit/Inventory differential - Cable and Broadcast have far fewer total impressions than online, but in terms of "units per hour" they have far more. An example of this is an hour long program viewed online will have anywhere from 1 to 6 ad units in pre or midroll. But cable or broadcast will have 22 to 24...with large clumps of impressions associated in these units. Online will eventually exceed total impressions as more users shift to online. But for now - online lags TV.

2. CPMs - online video effective CPMs (revenue divided by all total available impressions) is less than $1. That's just a sheer weight of numbers situation. TV is closer to $3-4 since ALL units have money against them (DR, National, Spot, ADU, etc.) in some way, shape or form. Even if you weed out the user-generated (low quality) video, the huge number of available impressions online that go unsold means that effective CPMs remain below the $1 level.

3. The look and feel of the ad, as related to the outlet, is meaningless. People do not care if they watch an ad on their computer, with friends, or on a large screen TV. In fact, some studies indicate users for online video are MORE ACCEPTING of limited ads to keep their video "free to view", than they are of TV ads (which many pay for already in the form of cable subscriptions that are getting outlandish).

I agree that, for now, TV has the upper hand. But online has many advantages. It is more engaging for advertisers, it is more quantifiable, and if you have a good agency who understands online video - you can really pinpoint your audience and make an impact with your ad.

Sadly, most advertisers still don't understand online advertising and they understand online video even less. But were I to be working on the other side of the fence, as a client representative for advertising, I'd be shoveling more and more money into online video. It's inexpensive, it's more effective, and I can tell you where it's going and who is seeing it - if I buy it right.

These things will, in time, cause online video to exceed the revenues of traditional TV. That, and just watching how my young kids are shifting their viewing habits tells me where the money should be spent.

Jim Thomas from Frank N. Magid Associates, February 6, 2010 at 8:43 p.m.

The quality and quantity of video will improve over time. It's about the partnerships and cross platform opportunities we can develop between emerging media and traditional media. Consumers win because they get more content and fast moving companies or individuals win because they find new and better ways to monetize their content.

Jerry Foster from Energraphics, February 8, 2010 at 3:56 a.m.

If the ad is more targeted it wins. If I am in a noisy airport terminal and I see an ad that talks of a $150 four wheel suitcase from Samsonite available on the second floor of the terminal I am in, you just got a sale..and within seconds of the display. Enough said?

The digital Hobo from TheDigitalHobo.com, February 8, 2010 at 6:35 p.m.

Its like a Chinese food menu.
Column A: Devices that let you choose what to watch. (mouse, remote, iPhone).
Column B: Boxes that do magical things to make pictures appear (cable box, HTPC, Boxee, Roku)
Column C: There's a screen that those pictures appear on (smartphone, monitor, "TV", the wall)

Any combination of the above will allow you to watch video whenever, wherever you want. Dave's point about the environment and sensuality (or emotive part), and the head start are the key issues. Any other distinction is completely arbitrary to the end user.

When you can use your iPhone to tell your media center to play an HD episode of House on your 60" high def screen, are you watching TV? If you have a Twitter enabled TV and are tweeting away with your social network, are you watching online video?

The way we talk about this paradigm shift needs to change, or we'll be stuck right where we are. Muddled and mired down in the weeds. We need some new words to make the conversation easier.

Watching TV = big screen, lean back, low participation/engagement. An episode of 30 Rock via Hulu on your 60" is "watching TV"

Watching Video = lean forward, more engagement. YouTube on your 60" is still a "web video experience"

Whether you use a remote, a mouse or a phone; whether you've got an HTPC, a cablebox, Boxee or Roku, or an H264 enabled phone plugged into your TV; whether you've got a 60" plasma TV mounted on the wall or a 24" LCD monitor on your desk; it simply doesn't matter. Pick one from column A, one from column B, and one from column C, and you are in control of whatever experience you like.

How do advertisers buy and sell our attention in such a hybrid of delivery models? Thats the challenge for them, and the biggest reason why "TV" will win. Its just easier to buy the same experience. And thats why Dave is right (as usual).

Paula Lynn from Who Else Unlimited, February 8, 2010 at 7:01 p.m.

Jerry, try again. You are in a busy terminal. Your luggage is checked. Carry ons must be less than 16" in the U.S. What in the world are you going to do with a larger suitcase? Common sense can trump associations.

Dave Woodall from fiorano associates, February 10, 2010 at 6:09 p.m.

I think everyone agrees that someday all content will be delivered digitally - regardless the destination device. All things being equal, when I'm consuming content - whether it's from YouTube or the Boob Tube - I prefer the largest device, in the most comfortable environment. I would guess most people feel the same.

Once 95% of households have fully integrated the Web and the Living Room, this conversation becomes moot. The need to distinguish a "web impression" from a "broadcast impression", or a "Living Room impression" from a "phone booth impression" will cease to exist. Advertisers won't care what device I access their content from as long as my exposure can be measured.

As I see it, the only metrics we'll use to distinguish between content in the future are: Who created it and what size screen was it created for. Just like today, User Generated Content and/or content intended specifically for small screens will not be able to be monetized in the same way as a theatrical release or a Network TV show. While we may watch UGC in our Living Room, its shear volume and fractionalized audience will continue to make it (mostly) difficult to monetize.