(Web) Video killed the TV Star

With apologies to Buggles – whose 1979 hit remembers the golden era of radio while celebrating the unrelenting force of technology to re-shape media.

It’s TV’s turn now.  Web & Social video are set to reshape both media. 

Locally stealth start-ups Overlay.tv and FaveQuest are playing in this area, as are local content producers like RaceDV. What’s happening locally is echoed elsewhere with video producers and aggregators/sharing sites opening daily it seems.  Each of them focused at different areas of the video sharing stack.

Video Application Stack

As everyone who’s looked at this area knows, viewer ship is exploding and with it ad revenue, and influnce.

Ad Revenue

In fact some commentators believe that the web will overtake TV as the major source of ad spend. For that to happen the web has to attract brand and product positioning advertising – not just transactional advertising.

Video presents some particular problems though – even for transactional ads. For ads to be effective they need to be embedded with the video – not on the same page as it. That’s why Viddler’s ad tagging technology is so promising – it puts the ads right in the video stream. Its potential impact on TV is nicely reviewed on Philadelphian Mel Taylor’s site (Philadelphia is home to Viddler and a city that is turning it’s self into an interactive media hub)

[Vodpod id=ExternalVideo.441477&w=425&h=350&fv=]

Viddler’s original  technology – in video commenting is incredibly powerful because it allows community to develop even as the video spreads from site to site through viral embedding. The ad technology is a logical extension of that.

What also isn’t clear to me is the business model – because I believe they are focusing at the wrong point in the stack. As I see it they believe these features will drive people to their site both to publish and consume video. I’m not so sure. I believe that web video will, like blogging before it, will move from individual user generated content to pro-am and organizations dominating niches.

These sites will be in direct competition for advertisers and viewers – not just with other web based services but with TV as well.

As Viddler demonstrates for ad delivery, and RaceDV does for niche user generated content, the advantage the web services have is that they innovate on numerous levels that TV doesn’t stand chance – because, as the Buggle’s sang “we can’t rewind we’ve gone too far”.

Online Advertising Consolidation

Jeff Jarvis notes that Google controls 40% of online advertising, and that their share of online advertising is growing faster than online advertising as a whole. In a world where online services are increasingly monetized by ad revenue – this concentrates incredible power in Google’s ad serving algorithms.

It’s not hard to understand why they are growing at such a clip – first the search market is tightly tied to the transactional ad spending – and that’s still growing rapidly as merchants discover the power of on-line ad to drive people to their site/store. Google is also one of the few companies that make buying ads or listing inventory easy – allowing both sides to scale in relation to each other. Finally contextual placement means assures the clicks that reinforce every party involved.

Some authors see the transactional ad market as a tiny sliver of the potential online ad market – noting that traditional media especially TV still collects the lion’s share of ad revenue and it is mostly brand (value / awareness) advertising. In fact it was only this summer that internet advertising surpassed radio – the media that came closest to transactional advertising for an age where in-store activity drove transactions. And radio in the smallest of the ad media – a third smaller than local TV and less than half the size of newspaper’s ad share.

ad-share-by-media-type.JPG

Magazines – another media form that offers advertisers content that can be relevant to their ads – is more than 2 times as large as internet advertising – while national TV is more than 4 times as large – and national + local TV is almost 6 times bigger. Taken together the entire internet has just 7.8% of all advertising spend – and Google ‘just’ 3.1% of the overall market.

ad share

 (Note both Tables from http://www.tns-mi.com/news/09112007.htm)

 Jarvis is right, “We need new networks that identify and create new marketplaces for new value — greater value than the coincidence of words on a page, which Google sells. “ This should be the domain of ad networks – but if my recent experience is an example they are not stepping up to the plate.

Ad Networks and traditional media have an opportunity to act as an interface between Agencies, who develop and place brand advertising for national customers, and small web or multi-platform publishers. This will be increasingly important as consumers shift their media attention from traditional media to web driven media. As Google learned the value is in the relationship between the advertiser and the content publisher – and that’s more difficult to automate for brand advertising because the content of the entire site becomes important.

The problem is that Ad Networks and traditional media have not automated enough of the qualification process for web publishers – so site traffic has to be substantial before they can afford to describe a sites market to advertisers or target ads specifically enough to that the revenue from them is better that is available from Google.

That has to change if Google’s online dominance is to be challanged.

Evolution of Online Advertising

The Guardian has an interesting piece about the evolution of online advertising written by Guy Phillipson, CEO of the Internet Advertising Bureau.

His essential thesis is that “online will overtake TV as the biggest (ad) medium by the end of 2010.” That’s a bold claim – that get’s bolder with the hypothesis that brand experience will be where the growth is.

Of course that has to be the case – not only because if the web is going to displace TV it has to be an outlet for brand building ads which dominate TV – but also because brand is an important part of the purchase decision and precedes the transitional decisions that web and search advertising currently dominate.

That doesn’t mean slapping a 30 second TV spot, or cutting it to 15 seconds (to get around the lack of web rights or meet the restrictions for a pre-roll) is the answer. The web is a different medium that offers a broad range of opportunities for ad designers.

Unlike TV, web based brand ads can both drive transactional actions and connect with the audience in a far more direct and personal way.  In fact according to Clickz web video not only generates more click but 8% generate some type of interaction – from sharing to expanding re-viewing.

What Clikz suggests is that because of this interaction level web video offer a great opportunity to use video to move beyond simply branding. It is I assume what Phillipson calls a “branding experience” – which is traditional brand message with opportunities for engagement and personalization the web offers.

What this means for creatives is that if they are designing online video they should consider:

• Offer a variety of interactive options as part of viewing or the player
• Frontload the message – because video watching is brief (2.7 minutes on average)
• Think viral and context – as the ad may be embedded and live online for a long time.

As an example of the latter take a look at the much admired Dove Evolution ad – launched in early October 2006. According to ViralVideoCharts this video has been watched 11.8M times, has garnered 5,000+ comments and is posted on 3,276 blog. Almost a year after its release it still gets posted on 6 new blogs a day.

I believe that Phillipson’s right – online advertising is set to dominate other ad mediums because it offers compelling branding,  transactional and interactive engagement, niche targeting and shelf long life.

Who could want more as they develop new and targeted creative?

Social Media Styles

Matt Locke has an interesting post

“describing social media spaces in a way that can be shared by both traditional media indies and digital media agencies”

He uses a use centered model based on behavior, action and expectation while on a site. The six styles are:

– Secret Spaces
– Group Spaces
– Publishing Spaces
– Performing Spaces
– Participation Spaces
– Watching Spaces

(link here for his description of each type)

I think he’s on to something here. Social media is first of all social – and that’s ultimately about behavior. Behavior is guided by context. What’s appropriate and expected varies according to situation (site).

This model is useful for site designers as it focuses attention on user’s expectations not the platform or technologies. It’s also a useful taxonomy, especially when applied to traditional media, as these styles are a continuum.

The real power for traditional media and digital media agencies is in meeting user expectation on the social site while using their traditional platform to reinforce the core characteristics of the sites promise. For instance Publishing paces are about showcasing talents outside your traditional group. Strategies to showcasing some material in other places are consistent with user expectation – while blurring the line between traditional and online media. In Canada the CBC program Exposure is an example, though not perfect – because while it’s online portion is technically well executed – but weak in numbers and that detracts from the core promise.

And that point to another issue – part of user behavior is getting to your site – and if someone else has a bigger, better event at the some time you need to think how you can be different to stand out.

Still starting from user behavior and expectation is a pretty wise idea. Thanks Matt.

Physical & OnLine Media Advantages

Jeff Jarvis, writing about Prince’s distribution of his new CD inside the London’s Sunday Mail says:

“it exploits the one last advantage of printing a paper on atoms and delivering them: distribution”

That’s not totally true. Each media type has several unique characteristics which can be used independently or in conjunction with online presence to extend the online into a physical experience.

For newspapers there’s distribution, locality, political / social identification (which come into play when the paper is read in public), as well as the social engagement that occasionally arises when accident, interest or expertise make citizens actors in the news. For TV its diverse thematic connections, story telling that models life aspirations and privacy. For radio its locality, mobility and personal connection with the announcer and other listeners.

What makes these characteristics important is that they form the basis of what can be unique media experiences where the online and the physical can be used independently or in conjunction.

It’s the ability of every media platform to transcend the online and situate it with in real physical relationships that will be the basis of its new identity and value.

Federated Advertising Platforms

In a recent post I’d said “media will come to recognize that they are as much in the advertising assembly business as they are in the ad delivery and content businesses”

Seems Time Inc. already recognizes which led to an interesting post at Publishing 2.0 comparing Ad Platforms and Ad Networks. The core distinction is who controls the relationship with the advertiser. I’d go a bit further suggesting there three big areas of  difference:

– who controls the relationship to the advertiser
– how member sites are qualified
– how is site readership related to advertisers target demographics

Ad Networks, such as Google, develop vast relationships with both advertisers and sites matching ads to sites algorithmically. It’s efficient and highly lucrative for the network owner because the most of the value lies in securing the advertiser and linking ads to sites.

The down side is that sites and ads are interchangeable, at least to the extent the algorithm allows. While this is true to an extent for almost all ad mediums what’s different is how the matching occurs. Advertisers can buy placement only according to indicators the algorithm tracks. Sites are selected the same way. Differences in site selection have to show up in the algorithm or they can’t be used for placement.

A problem arises because matching traditional advertiser metrics to the algorithm depends on an inferred relationship.  Characteristics like traffic, links in & out, metadata, keywords, location etc. need to be aligned with typical brand metrics like ages, sex, income religion or more sophisticated  psychographic and aspiration indicators. The alignment is imprecise, which may count for the struggle advertisers have moving online – and the growth in services like Search Engine Optimization which need to continually refine the relationship between ad placement criteria to match target market behavior.

The alternative approach is the Ad Platform which does some of the same things Ad Networks do (algorithmically based ad placement) except they layer on an ability for a more direct relationship between the advertiser and the site – which opens the probability of site selection based on traditional advertiser metrics – because site owners need to understand this as it also drives content choices.

It is here that traditional media can build a new value. First the cost of building the relationship with the advertiser is expensive which opens opportunities to profit on the delta between advertiser’s costs and what sites receive per placement. An added value is that sales costs can be amortized across more sites increasing margins.

The skills required to build advertiser relationship are also very similar to those used to qualify sites for advertiser suitability. And this qualification increases the range of properties a platform can offer an advertiser – while still delivering site metrics that are of use to advertisers. 

By extending their Ad Platforms into sites outside their direct family traditional media grow revenue and reach – while maintaining two differentiators that are core to their current and long term value – their relationship to the advertiser and their ability to relate content to market characteristics advertisers understand.  

The Future of Newspapers (and Radio & TV)

Jeff Jarvis asked what newspapers will look like in 2020. It’s an interesting question because 13 years is a huge timeframe – when you consider what the past 13 years have wrought. But here’s a stab.

First the underlying processes technologies that are in evidence now, or in accelerated adoption cycles, will be the same processes and technologies that papers and media will be wrestling with in 2020.

That seems like a relatively bold prediction. The reason is that the buildout for the telecommunications infrastructure to support high speed data has occurred and for business reasons it will not be supplanted in 13 years. Sure there will be tweaks and faster speeds but the underlying issues remain the same. Mobility will increase but again that doesn’t fundamentally alter anything it just makes what’s already happening on the web more available. Same goes for what ever nomenclature you want for user contributed content – it will increase in prevalence and types adding to the competition for attention that has affected media so much recently.

Short term all media will blur looking more like each other – but longer term this will not prove competitive (because it pits media against each other and not the real competition) – and each media will revert to its area of strength (intimacy & community for radio, information & analysis for newspapers, and entertainment for TV).

Regardless of medium, media will solicit and incorporate more user content – not just because it makes sense to interact with your audience when your competition is. They’ll also do this because it reduces costs, increases connection with the medium and provides new value for advertisers. The latter will occur because advertisers will recognize that only few people will contribute to multiple communities – and few products are sticky enough to be among those few. The centralization and advertiser friendliness media provides will be seen as welcome for initiating & hosting these discussions.

Demographic changes will also affect media. Internet use will rise to about 90% of the population – as older people decrease in number and usage patterns established by today’s teens become common in older demographics. This will make competition for attention more intense. The rate of user generated content will not grow at the same rate – in part because it is a function of education and that will not change dramatically – but also because it depends on audience attention and that will not grow dramatically either (more popular sites will get a lot of the new traffic). 

None of this actually answers Jeff question however – so here goes.

Thirteen years from now newspapers will still be published – much as they are today – though they will be thinner and likely free. Their purpose will be to provide to entertainment during commutes and provide a non-browser interface to promote the papers web site(s) and content expertise. There is a possibility that weekend feature issues like the NY Times magazine will make resurgence – as they provide an avenue for in-depth reporting and higher cost advertising (because of the staying power of the issues).

The biggest changes will be in business models and how content is delivered. First media will come to recognize that they are as much in the advertising assembly business as they are in the ad delivery and content businesses. What they’ll recognize is that there is a large margin delta between what advertisers pay for Google and what Google pays most sites. Most of this delta can be attributed to the value of owning the relationship with the advertiser. Media will live in this delta providing more value to partner sites and better targeting to advertisers wanting regional and niche sites.

The relationship media will develop with a multitude of regional or topical sites around advertising also speaks to a new model for content distribution and creation. Site owners and authors already understand audience, traffic, readerships etc, and have tools to measure them. Media will use its’ ability to link to sites across mediums (web and internet) as the first tool in its reemergence. Media can build smaller sites traffic – and in doing so establish beachheads against attention overload – buy providing more sites where their advertising and content appears.

The other area where business models will change is around content distribution – with media acting as clearing houses, filters and store for a federated network sites that share content community and overlapping audiences.

Of course I could be all wrong as well.