Video Making Its Presence Felt

Jun 6, 2005  •  Post A Comment

Now that the upfront is officially off and running, media agency Starcom has some numbers to back up all that’s been said and written this year about the advertising growth potential of broadband video.

Starcom has 54 Web sites on its consideration list specifically for client ad buys for broadband video this year, compared with 36 a year ago.

What’s more, inventory across those sites has grown 162 percent from a year ago because of demand from advertisers. And because most of the new sites on Starcom’s list are still small, niche players, most of the inventory increase is coming from established sites of TV players such as MTV, AOL and CNN. CNN recently lifted its subscription wall and Viacom has been redesigning its sites to aggregate content and become more broadband-friendly, said Chris Boothe, executive VP and group client leader at Starcom USA.

“From our perspective, we see more clients engaged in discussions about how to effectively use broadband in their video plans than we have in the past,” he said. Also, the interested clients aren’t just the early adopters, like automotive and entertainment companies; mainstream clients are starting to use broadband now too, he said.

To be sure, Starcom isn’t the only agency placing clients in the growing space of online video, but it’s been a pioneer and an outspoken proponent of the space for some time, dating to its so-called “broadband upfront” two years ago, when it plunked down $5 million across several popular Web sites. As such, Starcom’s take on the market serves as a barometer of sorts for whether the buzz will turn into buys. The agency’s early temperature-taking is backed by market research and early field reports from ESPN, Scripps and National Geographic Channel.

While the upfront has only recently begun to take shape, the demand reported so far could help gauge whether the broadband pundits’ predictions are right.

Within the overall broadband video inventory growth, Mr. Boothe said that entertainment Web sites are offering about 175 percent more inventory than last year. In fact, entertainment sites comprise more than half of all inventory in which Starcom places clients. ABC, CBS and MTV are big TV players on that list, while MSN is leveraging broadband video content from NBC Universal and AOL through The WB and other Time Warner properties, he said.

David Hallerman, a senior analyst at market research firm eMarketer, said that total Internet advertising will grow nearly 34 percent this year to $12.9 billion, following more than 32 percent growth last year. Interestingly, the last time any other medium that accounted for more than 1 percent of total ad spending in the U.S. had back-to-back growth rates higher than 30 percent was broadcast TV in 1953 and 1954, he said. He said his broadcast TV growth rate data came from his analysis of Universal McCann data.

While Internet advertising is growing tremendously, online video advertising as a component is rising even faster, said Jeff Lanctot, VP of media and client services at interactive agency Avenue A/Razorfish, which is also seeing strong demand for broadband video. “The audience is shifting online. Consumers are spending more and time there and it makes sense to add dollars,” he said.

New sites coming on strong this year are TBS, TNT, 4Kids Entertainment and National Geographic Channel, Starcom’s Mr. Boothe said. “Some other networks that we might not have looked at in the past are coming around with some interesting opportunities, like National Geographic,” Mr. Boothe said.

In fact, National Geographic tripled its monthly average for site visitors in the first quarter of this year compared with last year, driven largely by traffic to its broadband content, said Steve Schiffman, executive VP for marketing and new media. In March 2005, the site drew nearly 1 million visitors, with about half of that traffic going to the video section of the site. The site publishes five three-minute clips each week from its prime-time content.

National Geographic Channel is offering a number of new online sponsor opportunities in conjunction with the traditional TV upfront, such as its Video Jukebox, a portion of the Web site slated to go live later this quarter that will include more than 300 video clips from National Geographic shows. Marketers can run a 30-second commercial before each clip.

Other content companies report strong early interest in broadband video, though upfront deals haven’t yet been done. Jeff Meyer, senior VP of interactive ad sales for Scripps Networks, said that 45 percent to 50 percent of upfront deals are “interested” in broadband this year, up from only 10 percent last year at this time. The big issue is whether there’s enough inventory online to satisfy that demand, he said.

To that end, the content company plans to introduce several new ad-supported video-centric broadband channels this year.

As of late May ESPN said that broadband advertising was at the demand stage rather than the buy stage. But demand for ESPN Motion, a broadband video ad venue, is up 100 percent compared with the interest level at this time last year, said Ed Erhardt, president of ESPN/ABC Sports customer marketing and sales.

Of course, TV programmers are always concerned that the rash of money in the online sector could mean TV spending is shrinking. It’s not that cut and dried, though, Mr. Boothe said. Some clients are building new “video budgets” from the ground up that encompass TV, broadband and video-on-demand, while others are shifting “digital media” money into online. Still others are plunking incremental dollars into broadband, while others are cutting from other areas of the marketing mix.

“This year feels different,” Mr. Lanctot said. “Advertisers are more committed to the Internet. … Last year people bought into the theory of it, but hadn’t tested it as much.”