The wave of online video
coverage this spring and into the summer has missed a critical distinction for advertisers: There is a fundamental difference between TV online and online TV. Knowing it will allow advertisers to
build from an assured base online.
I call TV online the 50+ sites where viewers seek out streaming, information and conversation related to their favorite TV
shows. I call online TV the compendium of user-, publisher and brand-generated videos that consumers encounter across the Internet. Both get about 20 hours of time every month from U.S. consumers. But
they do it in vastly different ways, with real implications for advertisers.
TV online sites grow with viewers’ all-screen appetites. Think ESPN, The
Food Network, MTV or SyFy and programs like “The Walking Dead,” “Pretty Little Liars,” “Fargo,” “The Americans” or “Conan.” Their audiences
convene predictably because they’re committed to the content, so they form masses with a common source of connection.
Show fans watch wherever,
whenever they want; they read about the shows and the talent; they watch companion content (e.g., “Last Chance Kitchen,” the online contest that parallels Bravo’s “Top
Chef”); and they share their reactions on-site as well as on social networks. They literally propel the content.
Online TV is a different animal. The
portals can be destinations, but the programs don’t have natural audience momentum yet. For every “Gangnam Style” billion-view video, there are thousands of videos and channels
gaining viewers but not yet establishing audience momentum. Without regularly scheduled content in common, the audiences are floating and free-forming; they come and go in different directions.
TV online sells pre-assembled mass audiences for predestined showings, primarily through direct sales forces. Advertisers buy known audiences attached to specified
content. Advertising appears in video players at the center of sites the audience came for. The models are too simple to game (no viewability issues, no bots/fraud), and there are universally accepted
measurements of performance. TV programmers come from a make-or-break heritage: Viewers stay or the model breaks down.
Online TV sells discovered audiences
that can be aggregated to mass, primarily through an expanding web of third parties and exchanges. Advertisers buy demographic or behavioral triggers, and impressions are allocated and aggregated
algorithmically. Advertising appears in a range of venues, often thumbnail-sized players below the fold.
Importantly, TV online pays programmers enough to
keep creating content that’s compelling, consistent and sustainable. It takes a concentration of money and time to create the content that sets up robust advertising environments. TV networks
invest enormous sums in original content -- sustainable stories made for serialization -- and audience development. Branded TV programmers put 50% of revenues into owned content (more than $125
billion in the past five years).
In online TV, the biggest portals are just starting to invest millions in original programming. They
aren’t destinations for content on a schedule yet, and likely won’t be anytime soon. Online TV pays programmers pennies on the dollar -- the LUMAscape exacts its "tech tax" first -- that
don't support continual upgrades in quality.