Internet Video vs DVRs Advertising and Measuring Online Video

Nielsens release of commercial data has led to quite a bit of discussion in the advertising industry about what counts as a commercial worth paying for.

Is a commercial only worth paying for when its viewed live, during its run in a broadcast ? Should a commercial only be worth paying for if its viewed within 3 days of its broadcast ? Are there viewings of commercials from a DVR that are not worth paying for, or should the price be different dependent on when its viewed ?

These may ultimately be only negotiations to get the best possible price for a commercial, but what I find interesting is the silence when it comes to the impact these discussions may have on internet video advertising.

Very, very little video viewing online is streaming video of live programming. Internet video viewing is almost exclusively from on demand sources.

So riddle me this. If the Internet is the ultimate DVR for video, will advertisers put comparable pricing parameters on internet video that they are trying to put on TV DVR commercial viewing ?

If they do, and only pay for videos viewed within 3 days of the video being posted, won’t that put a huge crimp in the internet video business ?

Of coures the argument is that they wont put a deadline on viewing for which they will pay, but how can they not create a pricing hierarchy ?

Currently online video advertising seems to be sold by the playback. An advertiser buys X number of views at a given CPM.or buy price , to be played in , in front of, around , next to or after specific or a range of content..

What is not known for larger buys is just how long it will take to fulfill the buy. Minutes. Days. Weeks ? It depends .
What we do know is that the amount of video inventory is literally exploding and pricing is coming down. I think its going to be impacted by the outcome of DVR valuations. That there will be and should be timing constraints put on delivery. If an ad is delivered within the first 3 days, its full price. From there, it comes down because the value comes down.

It will be interesting to see what happens.

One more topic I want to cover briefly. That is measuring audience of online video. This is actually very simple, and video content hosts are hiding the important data that advertisers need and should be using.

The only real numbers that matters to define the audience of a video hosting site are the maximum number of
simultaneous viewers in any given hour and the average number of simultaneous viewers. Every other number, whether its views, “streams started”, whatever is meaningless and misleading. Just ask their bankers which number is more important, the maximum number of streams they wlil serve and the resulting bandwidth peaks, or the number of views they get.

If you want to compare the popularity of Youtube vs AOL Video, get them to publish these numbers, or give 3rd parties the ability to monitor these stats. They certainly monitor them to manage their bandwidth, so its easy for them to do..

This is the only true way to gauge relative popularity. Every other number is BS.

The same concept could be applied to regular websites as well. The number of simultaneous connections will tell you just how popular the site is.

Advertisers have growing leverage. It will be interesting to see how they use it.

29 thoughts on “Internet Video vs DVRs Advertising and Measuring Online Video

  1. May be due to their dislike.

    Comment by Christopher -

  2. Mark,
    I have heard that you are working on a promotional arrangement between you and a company in Japan that makes high-tech toilet seats. I think it is a great idea. I lived in Japan for three years and we are way behind the power curve in that arena.

    I have a product that I am trying to sell in America. You can view the product at http://www.softseat.biz The product is also \”bathroom\” related. The main problem I have had is overcoming Americans reluctance to talk in an adult manner about the bathroom.

    I would like to partner with you on promoting my product. Contact me at your earliest convenience.

    Comment by Robert Barnes -

  3. The best form of marketing is word of mouth people are so out of tune with commercials today. Downloading video will soon be the norm like buying DVDs today downloading will be tommorrows.

    Comment by Wendy -

  4. Re: Don\’s Following Remarks:

    9. Advertising has always been sold on the basis of \”time slots\” in TV and radio, or \”position\” in newspapers and magazines. Audience demographics is the major factor in all advertising mediums.

    The Internet turns all the normal advertising factors on their head. On demand Internet viewers have no concept of time slots. Position on the page is not as important as relevence to the content of the page.

    The Internet is the only advertising medium that has real verifiable viewer statistics. Every other advertising medium is using statistical extrapolations of very sketchy data to guess at the size and demographic of the viewing audience.

    Don congratulations!! – finally someone who is right on the money.

    I have been working privately with large firms in Australia constructing online advertising campaigns for roughly 2 years and you\’d be surprised at how naive some of the top execs are when it comes to advertising on the internet. (Although this may be somewhat skewed as many of the clients I deal with here in Brisbane are 60+ aged real estate agents whose affiliation with technology is as close as Elton John is to a woman).

    Unlike many online marketing firms, instead of taking advantage of their naivity I choose to educate my clients on the most effective ways of targeting their demograhic online.

    As you so rightly pointed out, the biggest advantage the internet has over its fellow advertising mediums is the ability to report back to the advertiser in depth stastics associated with their respective campaign(s).

    In regards to \”Internet Video vs DVRs\” – as the online market in Australia is always a couple of years behind our US counterparts😦, I look forward to this being a relevant issue for us in roughly 2010!

    Cheers,
    Peter

    Comment by real estate brisbane -

  5. But do people watch the commercial when they watch a program \”post-live?\” I don\’t. Do people watch the commercial when viewing a program live? Depends on the creative. Nielsen TV ratings are not science.

    Comment by Mary Price -

  6. Great post. I find it very interesting how the content owners and advertisers are getting what they want (don\’t count commercial skipping, do count DVR replays, do count online exposure). It makes me feel like TV will continue to progress from a technological and usability standpoint. I\’m still waiting for the device I can consume primetime TV, YouTube and other online-only content, plus my own video all in one device, WITHOUT a computer.

    Some thoughts on what that might look like and who might do just that in the next year:

    http://www.jacksonfound.com/2007/06/20/still-watching-tv-from-the-couch-but-with-content-owners-distributors-being-paid-differently/

    Comment by Adam Jackson -

  7. \”Internet is the ultimate DVR for video\”

    That is only one feature of online video, and a limited one of that. Internet video 10 years from now will make the DVR look like an 8-track.

    Comment by Matt -

  8. Yes! but do you have any guesses?

    Comment by Melissa -

  9. The main difference with internet video is the delivery cost. In broadcast, delivery is cheap so we can talk about statistics and advertising, in Internet video, the delivery cost is so high that we need a better solution to pay for it (targeted ads, subscription etc.).

    Comment by Some Guy -

  10. I sort of agree that the \”Internet is the ultimate DVR for video\”, but I gotta think that this is still years away (maybe 4) before the computer replaces the DVR in many houses.

    Comment by Dave Dugdale -

  11. i think the DVRs will be sure to quit this market,internet is trend,nothing can stop it.I would bet this is just important right now because they aren\’t used to counting views or cpm advertising. If the ad is time critical obvious the situation certainly changes and the simultaneous viewers is the only reasonable way to measure their exposure.

    Comment by wow power leveling -

  12. Hi, I dont think Neilson is providing the complete picture of media consumption both online and offline, there are lot of changes in this marketplace after Neilson installed their meters and panels all over the world.. lot of consumption happens on bit torrents and other online gateways. Neilson is not anywhere close to those audience and have no clue about emerging markets all around the globe.

    Currently, only company that comes close to providing such info is divinity Metrics.. lots of record labels, television networks and movie studios are using these metrics for audience discovery, effective marketing, promotions etc..

    you can check them our at http://divinityMetrics.com

    Cheers..

    Comment by Vishal -

  13. With the new technologies that are coming out, TV will have a more internet like experience and the internet will be able to have TV quality content. On top of that, the fact that the ads will be targeted will make them much more interesting as well as the new types of ads that will be replacing the 30 second commercial in the middle of the program.

    Comment by Tyler -

  14. \”The only real numbers that matters to define the audience of a video hosting site are the maximum number of simultaneous viewers in any given hour and the average number of simultaneous viewers.\”

    Mark: i don\’t agree with this statement. Efficiency is an important part of the equation. if i can have 1000 concurrent for 24 hours vs. 24K for 1 hour … i\’ll take the efficiency. i can sell the same ads against this. what am i missing? – dave

    Comment by david samuel -

  15. Running an advertisement on television is way more effective because of the limited selection. You can turn the channel only 300 times. The internet is endless and still viewed as the future, and frankly it is. Television has a 75 year headstart and paying for advertising on the internet is pointless. There is no \”captive\” audience, and never will be. Some people work for a living and sitting in front of a computer is called work, not play time. Television is playtime! Computers, internet=work Television=play Were not all loser nerds like you who play on the computer. Advertisers want to catch people at play not work, so take all of your analysis and stop thinking so hard.

    Comment by jeff -

  16. I truly believe that internet publishers fail to grasp the power of their medium.

    They are selling ads very similar to the way TV ads are sold, and the best reason I can come up with is that is because it is how the ad industry best understands it and how it has always been.

    Not atypically, we are seeing very little innovation from existing leaders. The innovative companies of the last decade who are fat and bureaucratic are going to milk their current position rather than figure out a way to make another few billion. They might buy the answer, but if the person with the answer grasps the magnitude of the answer it will not be cheap.

    Does anyone really think that the next great internet advertising idea is going to come from Google, Yahoo, Microsoft , Ebay or Interactive? (ask always gets the short end of the stick, so I thought I would throw them some love. LOL)

    The internet provides no less than 5 unique ideas for changing the way a viewer watches ads. The innovation is not however going to come from an existing big player. Rather it will come from an entity that has no desire to serve the same old ads to its consumers, an entity that takes chances because they really have no other options.

    Make the ads integrate nicely into the experience of the site, allow the viewer a voice in what kind of ads they like or dont like (example – easily let Geico know you hate the damn Gecko but love the Caveman…if Geico knew that, would they show you Gecko ads? let Geico segment its customers into gecko lovers and caveman people and those who are either tires of or dont like either – which lets them know when an ad is no longer effective) or would a financial institution advertise differently to a current customer than they do to a non-customer (why show a current customer an ad when they already use your product, why not a thanks we appreciate your business and here is a special offer only for existing customers…), best of all make the ads an expected and welcome part of the site. (Privacy issues are not a concern if structured properly)

    As an advertiser wouldn\’t the best possible outcome be that ads are not only expected, but enjoyed and anticipated?

    This(and much, much more)is all possible on the internet with the right vision. After brainstorming this very concept to death for 3 months, I finally have a workable model that addresses the wants and desires of consumers, as well as the needs of advertisers – both brand and direct response.

    Unlike most 2.0 ideas this one actually has a damn fine revenue model. I am in negotiations with seed investors, mostly trying to determine if I even need capital and want the dilution. It is so cheap to execute good ideas these days, too bad Texas makes it hard to cash-out equity from your home…

    Regardless, the existing online powerhouses are not where we should expect to see innovation from, it is the little 3 man ideas in Southlake, Texas or Lafayette, Indiana or Mobile, Alabama that are most likely to revolutionize the advertising industry.

    Comment by Diorex -

  17. Advertisements have to be at least as clever if not more then TV to pay them any attention. It will be interesting to see how they use it.It won\’t matter. The technology is now there to do on demand, targeted advertising on both platforms – Internet and DVD, as well as VOD.

    Comment by wow power leveling -

  18. Question: So riddle me this. If the Internet is the ultimate DVR for video, will advertisers put comparable pricing parameters on internet video that they are trying to put on TV DVR commercial viewing ?

    Answer: It won\’t matter. The technology is now there to do on demand, targeted advertising on both platforms – Internet and DVD, as well as VOD. This will allow fresh content to be displayed regardless of when the live broadcast of the program was. The price structure will be completely different because there will be different ad types than the standard commercials that you see now. In case your thinking Google, don\’t think that if you\’re talking about long form video.

    Question: If they do, and only pay for videos viewed within 3 days of the video being posted, won\’t that put a huge crimp in the internet video business ?

    Answer: See previous answer.

    Question: Of coures the argument is that they wont put a deadline on viewing for which they will pay, but how can they not create a pricing hierarchy ?

    Answer: The pricing hierarchy will be way different than you are thinking of.

    Statement: One more topic I want to cover briefly. That is measuring audience of online video. This is actually very simple, and video content hosts are hiding the important data that advertisers need and should be using.

    Response: They will be using that data soon.

    Statement: The only real numbers that matters to define the audience of a video hosting site are the maximum number of
    simultaneous viewers in any given hour and the average number of simultaneous viewers. Every other number, whether its views, \”streams started\”, whatever is meaningless and misleading. Just ask their bankers which number is more important, the maximum number of streams they wlil serve and the resulting bandwidth peaks, or the number of views they get.

    Answer: Sure, bandwidth is a cost they will incur, but new ad types and targeting will allow them to recover these costs and more on the Internet. Mostly because the players are getting much more cost efficient while allowing for TV viewing quality. Other than that, simultaneous viewing will mean nothing here in the short future unless the ad campaign is targeted for a very specific time frame.

    Statement: If you want to compare the popularity of Youtube vs AOL Video, get them to publish these numbers, or give 3rd parties the ability to monitor these stats. They certainly monitor them to manage their bandwidth, so its easy for them to do..

    Response: I thought we were talking long form video, not UGC.

    Statement: Advertisers have growing leverage. It will be interesting to see how they use it.

    Answer: This will be the case for this years upfronts and possibly next years. But, as soon as the technology I\’m talking about it deployed, the leverage will be back in the programmer\’s hands.

    Mark, if you want to know the specifics I\’m talking about, email me.

    Comment by Tyler -

  19. There\’s an apples and oranges comparison here. Videos are ran over and over again each day. Plus, because they\’re within an optimized webpage, they\’re looked up in a search engine. Thus, if the video concerns a Paris Hilton issue that is discussed on the TV news, the search for that will go up, and thus cause a new round of views for the applicable video.

    For the video meter to stop running in this case would be unfair and not negotiable from the standpoint of the video producer. A commercial withing a video, or a sponsored video is part of the video. Thus, it \”moves\” with the video — if the video is found on Mamma.com, the ad will be there, and so on.

    See…

    http://zennie2005.blogspot.com/2007/06/mark-cuban-says-advertisers-have.html

    Comment by Zenophon Abraham -

  20. Hey Mark, Although veiwing anything on the PC vs the big tube is the sit down dinner vs the fast food thing, one of the reasons I like seeing something online is that its more concise and you can usually come back to it. Also the lack of commercials and being able to block those Popups. When a thirty second commercial does come on before I view something I usually just block it out for that time and wait for what I wanted to see. As on the tube. Advertisements have to be at least as clever if not more then TV to pay them any attention. Thanks for the thoughts. P.S. It may just be me but I still havent heard any uproar about any injustice served to the Duke guys. How quickly we forget unless its popular to remember.

    Comment by Frankie from Lawnside -

  21. Advertising has always been sold on the basis of \”time slots\” in TV and radio, or \”position\” in newspapers and magazines. Audience demographics is the major factor in all advertising mediums.

    The Internet turns all the normal advertising factors on their head. On demand Internet viewers have no concept of time slots. Position on the page is not as important as relevence to the content of the page.

    The Internet is the only advertising medium that has real verifiable viewer statistics. Every other advertising medium is using statistical extrapolations of very sketchy data to guess at the size and demographic of the viewing audience.

    I do not understand your point about simultaneous viewers on the web. I don\’t see how that is relevent or indicitive of popularity, versus total views. In fact, I would argue the opposite. The real measure of how popular a piece of content is should be measured by views after the initial hype period. Content that continues to be viewed long after the hype is very valuable indeed.

    Auctions determine the price of ads on Google and other Internet sites. Auctions are coming to audio and video too. Time slot pricing will fade over time as more advertising moves to the \”On Demand\” web.

    Don Dodge

    Comment by Don Dodge -

  22. Advertising in Internet videos should demand premium pricing. I rarely rewind a DVR-recorded show for a commercial but I don\’t mind watching a minute of commercials to catch up on an episode of \”My Name is Earl\” on lunch with my other co-workers in the office.

    The Internet is the last place where commercial advertising is really being accepted by viewers right now and that\’s mostly because of the novelty of the medium. In the future, advertisers are going to have to pitch and pander far more to be included directly in the content of shows, movies, films and books (ala Snapple in Seinfeld).

    Comment by Joshua Minton -

  23. Statistics show that advertising on DVR do work – even when they fast forward through them. http://money.cnn.com/2006/04/07/technology/business2_browser0407/index.htm

    Comment by Pinologic -

  24. \”So riddle me this. If the Internet is the ultimate DVR for video, will advertisers put comparable pricing parameters on internet video that they are trying to put on TV DVR commercial viewing ?\”

    internet video is not dvr, internet on demand video would have a completely different ad cost model. The ads placed in on youtube for instance would change, they would not be constant. (or at least that is how i envision it as the server is controlled by the host. I am defining internet TV as YouTube, joost, and any online video derived from a host server, not a personal device as DVR.)

    Also, your premise of simultaneous video viewing does not make too much sense (regarding the relavence w/the cost of the ad). If you watch a video, you watch the ad. that ad gets exposed to a potential consumer. if a video is viewed 500,000 times why would the ad be relavent if it is being viewed at the same time as others are viewing it? (especially is the ad changes) the \’simultaneous viewed\’ concept dismisses the \’on-demand\’ premise.

    but the premis of your article all depends on how the ads will be delivered and controled by the internet video hosts.

    but, then again, i \”don\’t have a clue\”.

    Comment by echotoall -

  25. I think you\’re right about the advertisers having growing leverage. I\’d probably be ok with full fare counting +7 instead of +3. The thing I\’m interested in, the thing Nielsen didn\’t share accept with clients is the actual spot by spot ratings. I want to see how the spots during the middle of the break periods do versus the spot at the end of the break (for those watching live). If you\’re a client of Nielsen and got any data on that, please share!

    That it\’s 2007 and sites still get away reporting #\’s that don\’t matter at all…it just seems so 1997. Why do the advertisers let them get away with it?

    Comment by Robert Seidman -

  26. The viewing window for broadcast commercials depends on the message. If it\’s a movie trailer running the week before the movie releases the three day window makes sense. But if it\’s a \”feel good about my product\” ad such as many of the Southwest airlines ads the time frame can be much longer. As for online ads, I don\’t pay any attention to them at all. I do make note of the really obnoxious ones that manage to get past my blockers. The note I make is to never buy that product or service.

    Comment by MIke Genette -

  27. The issue with paying for delayed commercial viewing in TV is that the commercials can not be changed from the original telecast. This is not an issue online and eventually will not be in TV.

    Comment by angus -

  28. Screw advertisers. Make TV entertainment subscription based. HBO is doing just fine with that business model. In fact, they\’re doing more than \”just fine\”. They have consistently better product than any \”viewers at broadcast\” business model. Here\’s my $5/mo. Make shows that you know are quality. If I like a few of them, I\’ll keep paying.

    Comment by Keith -

  29. I think using only product placement is the way to go. You certainly can\’t tivo over it, you could still pay based on views and just give a time limit on how many months/years your willing to per per view.

    Comment by online cigarettes -

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