Marketers Shift Strategies for Digital Video Age

Nov 14, 2005  •  Post A Comment

The new byword for many marketers is “Pass on mass.”

In other words, reaching a mass audience is not necessarily the key marketing strategy in a new world of digital video distribution.

“For most marketers it’s more important to reach the right people,” said Peter Sedlarcik, VP and research director at MPG. “The new channels and the new formats and the new technology allow us to counteract the concern that might exist from the mass not existing anymore,” he said. “The real opportunity that actually is very exciting for advertisers is the targeting potential that exists because of the technology in which this stuff is going to be delivered, both the VOD and on satellite and cable.”

Furthermore, he notes that with video content delivered on the Internet, “There’s more information about the people who are either downloading or accessing the content. So I think the targeting potential is tremendous because ads can be delivered in a much more precise manner.”

What’s become obvious is the erosion of what “mass” constitutes.

“Look at the audiences today and what they were 10 years and 20 years ago, even five years,” Mr. Sedlarcik said. “I think you’ll see that the true mass in terms of finding a big, significant portion of the population in one particular spot is definitely not there anymore.”

However, others are quick to point out that the sky isn’t falling on the traditional TV model just yet. Broadband advertising won’t supplant traditional spending anytime soon.

In fact, broadband ad spending, while growing rapidly, is only at about $300 million per year, compared with about $60 billion for TV, said Mitch Oscar, executive VP of Carat Digital. “I don’t know that that’s the threat,” he said. “We have to expand what television is.” Instead of simply relying on broadcast or even cable, Mr. Oscar said, one has to add other digital media, be it video-on-demand or video iPods or other services, to reach the consumer.

“We believe in context,” he said. “If we think CNN is a good property to be associated with in the linear world, then we are recommending to our clients VOD if it exists, broadband if it exists and mobile if it exists.”

Mr. Oscar said people are watching more TV than ever before, and added, “Appointment TV is still very important.” He also pointed out that viewers “can’t access any of these programs that are going to alternative devices until they’re actually broadcast.”

“If the viewer wants to wait, they have more control than they’ve had before,” he said, “but there are so many ramifications to that.”

One ramification might be high TV bills from buying ABC shows from iTunes, CBS shows from Comcast or NBC shows from DirecTV. “It’s one thing to say I’ll watch one episode for $1.99, but if you watch all four it’s $8. It adds up,” Mr. Oscar said.

Another complication is that precise targeting is a difficult trick. “Online advertising is a very complicated business because there are all kinds of ad units,” said Will Richmond, president of Broadband Directions. He added that some of the online players, such as Google and Yahoo, are “masters at the online advertising realm.”

AOL’s advertising revenue, for example, was up 28 percent to $238 million in the third quarter. AOL is one of just four companies that take in more than $1 billion in annual ad revenues.

Tracey Scheppach, VP and video innovation director at Starcom, said she’s looking for the day when most consumers can connect the content they can get off the Internet to their television sets. “That’s when I think we’re going to see more mass adoption of this,” she said.