Commentary

Progressive Companies Rewriting Digital, Ad Realities

The arbiters of online video content and advertising are benefiting from growth support in unexpected places--like the dismal economy. In fact, these strained times may yield a surprising wave of content and advertising innovation, as well as enterprising solutions. One can only hope.

The most dynamic of all forces for change could turn out to be corporate financial jeopardy. The pervasive impact of a recklessly overleveraged financial system is behemoth, so finding a backstop for sliding revenues is job one.

The ability to create new business pursuits and models from whole digital interactive cloth is a lifesaving imperative. Media-related companies have a unique opportunity to mitigate risk and stimulate growth. They can do this by integrating and using digital technology to better monetize their existing assets and mine new ways to connect consumers, content and commerce.

The crumbling status quo in an uncertain economy will force companies to help themselves. That means engaging in content services that utilize advertising, e-commerce, user participation and communications options in new ways. The impetus for taking more aggressive action is a robust consumer broadband market.

Evidence of critical mass adoption is everywhere. Some 84% of Americans use mobile phones; 16% of them use mobile Internet services. Nearly one-fifth of U.S. households watch TV broadcasts online, according to the Conference Board. Total Web spending is on its way to surpassing television advertising spending by 2021.

Increasing mobile functionality, ease of interface and use, and new applications will be future drivers. What the marketplace needs now are fewer reticent advertisers and more bold innovators. The opening panel I moderated at OMMA Global in New York on Thursday raised some of the questions that media and advertising-related companies should be asking themselves: --What are new models for monetizing content, especially for mobile devices? --How do we redefine and reinvent advertising for interactive platforms? --What is the best way to create original content for digital interactive platforms and devices? --What are the limits to repurposing television and film content? --What are the pros and cons of brevity in content? --When and how should companies engage in free and paid content? The fledgling digital marketplace is energized by new initiatives at every turn. As touched upon in our panel, WB.com is forging a new model for ad support. Hulu is perfecting and testing the limits of archiving existing film and television fare. Al Gore's Current TV is setting a new format for constructive user-generated advertising and content. MySpace TV is pushing the parameters of social networking with new applications, from music to presidential election debates.

Such endeavors will help mass media and advertising find its way to micro-audiences, building microbrands, low-cost content production, and developing innovative, customized niche advertising solutions.

Madison Avenue's more progressive advertising agencies and advertisers are creating a new interactive construct to reinvent the industry--even in the absence of certifiable cross-metrics, which may never be a reality. Eventually, the continuing double-digit growth of online advertising will reflect new value as dollars shift from more traditional media. Walt Disney's ABC and Ogilvy Entertainment are working on new interactive advertising models. Blue-chip advertisers, such as Kellogg, discover that digital ROI surpasses that of TV.

Google is yet another change catalyst as it stealthily becomes a new-order content company: crafting YouTube as a repository for uploaded and stored personal video. It's also forging new ways to monetize content and advertising with the Google Content Network and the living-room Google Media Server. As a manager of nearly 40% of all online video, as YouTube's Web fortunes go, so goes the industry. (YouTube's projected $350 million revenues in 2009 will be driven by 13 hours of video downloaded every minute.). Because of Google's digital dominance, its influence is a force that all must reckon.

Another critical, underestimated change catalyst is the explosion of digital distribution platforms and devices. From Sony's Bravia TV and Internet Video Link to AT&T connecting its Internet video service to its exclusive service for Apple's iPhone, important integration maneuvers are everywhere.

Behind the Google Content Network is the $400 million investor Media Rights Capital, which also is a principal of the newly formed digital entertainment Content EcoSystem--pledged to create a free and open, ubiquitous "uniform digital media experience" to rival Apple's closed iTunes system. The non-advertising initiative that will be universal to all devices and platforms could change the digital content landscape, backed by a consortium of Hollywood studios, retailers, service providers, and consumer electronics and information technology companies. They include Viacom, Microsoft, GE (NBCU), Cisco Systems, Best Buy, Sony, Time Warner, VeriSign, News Corp., Toshiba, Intel, Comcast and Paramount Pictures.

Yet another change catalyst is the pent-up supply of financing from venture capital, private equity and individual investors, which have been idle during the financial crisis. Video aggregators alone have raised roughly $400 million in financing in this bad year from angel or VC investors. Digital is as sure and solid a future bet as any industry holds. The returns ride on the ability of all media-related companies to deliver on investments in constructive ways, creating new models and strategic thinking that generate new products and services.

It can and will be done.

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