• by April 13, 2004

Media chatter these days may be focused on the TV upfronts, but online publishers--and more importantly, advertisers--are getting serious about streaming video and other video formats on the Web.

Having launched the MSN Video Service in January, Revlon is off and running with its major brand campaign on Microsoft Corp.'s MSN. The software giant's MSN has also embraced Unicast Communications Corp.'s Video Commercial, a full-screen online ad format that plays 2 MB, 30-second broadcast-quality video.

Advertisers including Pepsi, Honda, and McDonald's have tested Unicast's cached format on MSN's Astrology and Entertainment channels and Hotmail property. Scott Moore, general manager, MSN Network Experience, says MSN hasn't rolled out the Unicast Video Commercial format on a broad basis yet. Yahoo! and America Online's AOL continue to assess the Video Commercial format, which debuted earlier this year.

Video is part and parcel of the content and revenue equation for most online publishers, many of whom are building extensive archives for video clips that can be accessed on demand. Visitors to iVillage, which has a deal with FeedRoom, the broadband news network, are surrounded by video. "It's omnipresent," notes Doug McCormick, chairman-CEO, iVillage. Video opportunities appear adjacent to each of iVillage's major channels. Unicast's Video Commercial has run on iVillage with advertisers Pepsi and Honda.

But McCormick is even more excited about what he calls a "full-screen arrival ad" that greets visitors at the gateway to iVillage. A Volvo execution currently running on the iVillage home page represents a full- screen arrival ad.

Among the publishers working with Unicast's Video Commercial format, which debuted earlier this year, are weather.com, iVillage, Bolt, Cox Newspapers, Primedia Automotive, SmartMoney.com, ESPN.com, AtomShockwave, and MSN.

Campaigns for Honda, Verizon, and Nextel on weather.com currently use the Video Commercial. Peter Green, vice president and national sales director, weather.com is more cautious when it comes to streaming video. "You have to be very careful about how to use it," he says, adding: "In [the] entertainment [category] it makes all the difference in the world, but user control and the experience a consumer has with video on the Web is different than with TV," he maintains.

Seth Levenson, vice president of sales for AtomShockwave, favors Unicast's new format: "The quality of the video resolution is really excellent," he says. Levenson adds that there are challenges in the early stages of new formats with download-to-play ratios, but "the fact is, when it does work, it looks really good."

The Unicast format loads in the background in up to 30 seconds. "It's identical to a TV ad experience--it doesn't slow the page down, you click, and the ad plays," said Dick Hopple, Unicast CEO.

Publishers that aren't using the new format complain that it is a bandwidth hog. AtomShockWave's Levenson says there is a trigger for the download of the ad, which happens as the user is looking at Web pages. After a few seconds, the ad will play. Some activity triggers the actual play, though sometimes the downloaded ad doesn't play. When the ad doesn't play, it is a waste of bandwidth. "Unicast pays for the bandwidth," responds Hopple.

Levenson notes that the burden of unplayed ads is really on publishers: "It's impressions that never get seen. Essentially, for every one Unicast ad that we deliver, we may have to burn up two or three ad impressions," which he says is the essence of the download-to-play ratio issue. Still, he notes that there is a certain degree of trial and error with every emerging ad format.

ESPN.com views the Unicast Video Commercial as a compliment to its ESPN Motion product and offers it to advertisers with Motion, and in cases where Motion inventory is sold out. "It's our intention to package both Unicast and Motion inventory into the TV upfront this year," says J. Riley McDonough, vice president-sales, ESPN.com. "It's fair to say that we probably could sell as much as 15 percent of our inventory [via the upfront]--[that's the] inventory that we've currently set aside for video," McDonough adds.

"We are being very cautious about the amount of inventory that we devote to this. We feel that it's important to condition the audience over a longer period of time. ... We're mindful of the user experience," McDonough adds. He projects that 2-3 percent of ESPN.com's inventory will be allocated for the Video Commercial, and 3-4 percent for Motion.

So far, Honda has re-upped with ESPN.com for the Video Commercial through September. No other ESPN.com advertisers have bought in as yet, McDonough says.

McDonough says that the Video Commercial is ideal for ESPN.com because users can have Motion playing at the same time that they receive the new ad format. "It only requires that people visit two or three pages on the site before they receive one of these ads," he says.

As with iVillage, video is everywhere on ESPN.com. In fact, ESPN.com uploads anywhere from 50 to 70 video clips per day. "We have an advantage in the market to run these video products because 85 percent of our audience comes to us via a broadband connection," McDonough notes. People are accessing the property at home, at work, and at college.

More than 3 million people have downloaded the ESPN Motion application, and the product has an average of 1 million daily users. A new feature on Motion is called Motion Showcase. It's an area where visitors can access archived video clips to create their own play lists.