The fact that ABC and Nielsen have come out with research which suggests that online viewers will put up with more adverts is hardly surprising, but this is clearly a moving target. Video advertising views will definitely increase over time, but interruptive advertising will exhaust viewer patience more rapidly than TV did.
As more people view TV programming online, the viewers perception will be that they are watching it that way because the TV itself shows too many adverts, or shows the programming only at one time in a broadcast schedule. For 50 years viewers had only one viewing platform, broadcast TV, and ever since alternative viewing options have been added, segments of the audience have switched, initially because the experience as preferable.
Viewers buy or rent DVDs, or they go to Cinemas to watch films or store them on VHS tape and recently we have added to this the ubiquitous DVR as well as VoD. Each one has offered either newer, exclusive viewing with a different business model, or has promised a better, less advert interrupted viewing experience. The result is a complex, fragmented viewing panorama, where viewers move from one to another viewing platform, in order to get what they perceive as the best total viewing experience for their lives.
Add both online and portable device based viewing to that and you will obviously have more of the same. But at the introduction of every new viewing experience there is a honeymoon period, a time when the revenue expectation is low. We try the medium out first, and see if people like it. It has taken an awfully long time for people to like viewing online, mostly they didn’t want a viewing experience that was just for one person, viewed from a screen that was 18 inches from their face. They couldn’t reconcile it with TV viewing, done from 10 feet away with other people in the room, who also chat and comment on the programming.
We have to always remember that things change and we have to establish viewing habits and benefits first. If the first online programs had been scattered with advertising then even fewer people would have watched them and then we would not be at the point where, in the US at least, viewing is resilient enough to start piling on the advertising.
What ABC claims to have discovered through the Nielsen study is that doubling the advertising in online program, doesn’t decrease customer satisfaction.
It also claims that increasing the number of brands from one to as many as four in a single episode not only didn’t diminish the advertised brand or product, but actually improved perceptions of that advertiser. This is important because many online programs rely entirely on one sponsor and this is the finding that ABC would most like ‘ by ‘proving’ to advertisers that they will not lose benefits when sharing an online program sponsorship with another brand, it doubles or more the total advertising inventory available to its online vehicles, driving up revenue.
So what we have here is a moving target. As more people come to rely and trust online viewing, they are less easily put off by it. And right now there is so little inventory in online viewing it is expensive and is therefore deemed to be out of reach of any but the richest advertisers. By making each slot cheaper and sharing the load on advertising driven, free to internet programming, it opens the area up to more and more advertisers, at double the revenue or greater.
It would be unwise to do too much of this before any given platform for online delivery was mature, and had semi-saturated its reach, but once viewing growth appears to slow down in terms of numbers of additional viewers, increasing the advertising load is the only way to increase inventory.
Other things which make online advertising MORE valuable than TV advertising is knowing a lot more about your audience and restricting adverts to people who ‘qualify’ for your campaign.
So will this need to maximize the revenue kill the golden goose? We think not. Everyone who has commented on this research has said they hate this development and that more adverts will kill online programming. We are not saying that increasing the number and frequency of online video advertising will be popular, and we must always keep in sight that this is about ‘tolerance’ to advertising, for the ‘majority’ not something that viewers ‘like’ or which everyone will put up with.
Eventually the internet is a rich two way environment, and there will emerge ways of telling who will put up with lots of ads and who will only put up with a few, and platforms with algorithms that can judge this should emerge which vary the amount of advertising for each person, as well as varying which adverts are fed to such viewers.
Obviously this whole game is going to get more interesting as there are more devices installed which allow online (internet) viewing on a TV set, where it is shared across an entire room, but already the enterprise of broadcasters everywhere, it the US, but also in Europe (especially with the viewing figures the BBC has created with its iPlayer), are already enough to change the landscape.
So if you are writing a business model or a business case which relates to online video programming, you just got license to set it at one level and then gradually increase the inventory over time and if that makes it easier to raise money (inside a broadcaster or externally) that means there will be more and online video services springing up every day.
This will then move from the US to Europe and the rest of the world as a roadmap on how to monetize video on the web and take its place in the fragmented video universe.
As a last aside it doesn’t mean that online video will be watchable. When you visit the US from outside of the country and turn on a TV set, it is almost unwatchable because the frequency of advertising has reached such a vast level there compared to most countries. The same will be true of online viewing ‘ US online viewing will end up more interrupted by advertising if they take this study too seriously. What that will lead to is PC based DVRs emerging which strip out advertising, although this is tough to do for streamed content.
What really needs to be considered is the fact that the internet doesn’t need to simply copy the TV in its monetization. It can choose not to interrupt the programming as a way of forcing people to view adverts, but can also, either instead or in parallel, show overlay advertising and advertising with links around the edge of programs. This will mean that the message gets across during viewing, rather than becoming something like pre-roll and post roll advertising, which is treated as something to avoid, rather like TV advertising. A combination of both approaches is the likely outcome for online TV.