Tv networks show new-found commitment to online video

The most popular YouTube video doing the rounds last week was of University of Florida student Andrew Meyer being ‘tasered’ by campus security as he tried to interrupt a speech by former US presidential candidate Senator John Kerry. According to Bernstein Research, a Wall Street analyst firm, in aggregate, the three versions of the clip amassed 2.7 million online video views – nearly as high as the average primetime audience for all cable news channels combined. Bernstein says that though this is just 10% of total national broadcast for television news (NBC, CBS, ABC and Fox) the importance of online video hasn’t been underestimated by these networks.

The major TV networks can’t afford to underestimate YouTube or its smaller rivals because TV’s biggest clients – marketers at major advertisers – are watching the online video space closely. Internet video is no longer a social or technological phenomenon and has very rapidly become the way many of us consume more and more video content, especially in the US. According to comScore Networks, in July nearly 75% of American internet users watched an average of three hours of online video during the month. ComScore says 9 billion videos were watched that month with 2.4 billion of those clips watched on YouTube. Yahoo! came a distant second with 390 million videos, while Fox Interactive Media (mainly made up of MySpace) had 298 million videos.

Networking company Cisco Systems says internet video streaming and downloads will increase from 9% of all consumer internet traffic in 2006 to 30% in 2011. And Comcast, the largest cable television operator in the US supplying 11 million homes with broadband connections, says nearly a quarter of all data bits that run through its broadband network are YouTube videos.

With numbers like this it’s evident the TV networks have had to move quickly to ensure they stay relevant in a changing world. Though they have all been making various noises of intent over the past year, things came to something of a crescendo last week, in the run-up to the autumn season of television programming, as each of the big four had a new announcement about airing their new shows via the Web.

NBC got the most coverage with its plans to offer free downloads of some of its most popular shows including Heroes, The Office (US version) and Tonight Show with Jay Leno. The catch, depending on your perspective, is that the shows come with advertising spots embedded. It also involves downloading a special player that prevents viewers from skipping through ads.

NBC’s new service will be called NBC Direct and it launches in November. The announcement comes just weeks after the network fell out with Apple iTunes’ online store service over a pricing disagreement.

Disney-owned ABC wasn’t going to be left out of the online video action and announced a partnership to offer many of its primetime shows, including Grey’s Anatomy, Desperate Housewives and Ugly Betty, through a joint Web portal agreement with AOL.

And then, of course, there was the unveiling of the name for NBC’s and News Corp’s joint online video distribution platform Hulu.com. Hulu isn’t quite, as many in the media described it, a YouTube-killer. It is simply a platform for the two major television networks to jointly distribute their TV programmes such as 24 and American Idol, either as a destination in itself or as partner platform with other sites, such as a Yahoo! for instance.

But a lot of these moves only make sense on a new platform if there is advertising – as far as the content owners and the marketers are concerned anyway.

“Advertising is the key proposition for content owners, and part of the reason why they’re distributing so widely is they need a high number of impressions to provide enough inventory for the major brand advertisers,” explains Ian Blaine, chief executive of Theplatform, a Seattle-based digital media delivery company bought by Comcast last year. Theplatform works closely with many of the biggest names in media, developing their online video strategies including Hulu.

‘Intelligent’ targeting
According to Blaine, the key challenge for many of these major names is adapting to a new medium where the viewer is far less forgiving of interruptive advertising than on broadcast television. “We’re trying to work out what the frequency of an ad should be within a clip,” explains Blaine. “We can figure out how much of a show someone’s watched and offer ads on a more ‘intelligent’ basis than just running advertising on a linear broadcast.”

For example, a user who has watched an episode of CSI halfway through and then starts watching Desperate Housewives shouldn’t have to see the same ads or same number of ads. Add to that the strong possibility that the online TV ‘networks’ might also have an idea who you are and where you live through a combination of your IP address, various cookies and possibly user registration and thus be as close to the Holy Grail of video advertising as marketers have wanted for over a generation. Two people watching the same show could see different advertising clips because their different interests and preferences have been calculated into the ad equation. “We’re trying to add in the intrinsic benefits of the internet, which is that it’s bidirectional,” explains Blaine.

The toughest decision for the online video sector is how to avoid using the 5to 15-second pre-roll ad spots which have become commonplace already. YouTube’s founders have been reluctant to use the pre-model and finally announced last month they’d be using an inline overlay advertising technology which flashes over the bottom of video.

Others are taking it a step further by using advanced contextual advertising. AdapTV, a ten-month-old San Mateo, California start-up, matches relevant advertising to the publisher’s content in real time. AdapTV’s technology analyses the video, audio and its meta data. So, for instance, if an actor starts talking about a new DVD coming out, an ad offering the DVD for rent from Amazon might flash up at the bottom of the video. AdapTV has signed deals with Theplatform and Metacafe, another online video site.

Quality counts
Marketers will no doubt be pleased that more quality video is coming online in the US to compete with the growth of user-generated content, which takes up more media share time according to most scientific and anecdotal research.

Blaine believes that advertising with online video, just like television, will perform much better if professionally made quality videos are used, rather than the two-minute low-quality clips made popular on YouTube. Nevertheless, Bernstein Research reveals that users do also want to see “lo-fi stuff”, or “the cat having relations with a giraffe” content, as they put it.

“The issue for the TV content players is that when dealing with an internet audience, five minutes of a badly shot clip of someone being hauled to the ground and tasered really is often more compelling than a one-hour reality show,” states Bernstein.

“It is often also much more immediate and relevant to younger viewers than reports of the incident going on the evening news.”

Yinka Adegoke is a New York-based business journalist. us.column@gmail.com