Stacking Up Against the Major Players

Apr 9, 2007  •  Post A Comment

The video-on-demand business has been hampered by audience measurement challenges for the past few years. Music Choice, the music video-on-demand network, believes it has a solution.

Music Choice, which has been among the most successful VOD networks in garnering ad dollars, is angling for a share of network ad money rather than a mere slice of the new-media budget. Over the next few months, Music Choice plans to start pitching its ad potential to buyers based on how Music Choice compares to a network buy in a prime-time show, rather than by using standard VOD metrics of total or unique impressions.

“We are pretty hamstrung by limited reporting of VOD nets and are positioning like a traditional network now,” said Christina Tancredi, executive VP of Music Choice.

Music Choice delivers its programming — music videos, interviews with artists and music-centric original shows — to about 22 million VOD homes. In February, the network delivered more than 40 million VOD orders for its programs across those homes. Hard numbers are unavailable, but media buyers consider Music Choice to be among the top three networks for VOD impressions.

Now, the network wants to leverage that footprint into the traditional reach and frequency metrics, the language in which ad buyers are already fluent. If Music Choice is successful with this strategy, it could represent a new step forward in the VOD business, which has largely been stalled in the past year.

While advertisers are ponying up meaningful ad dollars for the medium, and while Comcast alone delivered 1.9 billion VOD sessions last year (up from 1.4 billion the year before), VOD as a whole has been a second-class citizen in the broadband revolution. Advertisers are drawn to the flashier broadband video, and they also want more detailed metrics from VOD than they receive now.

Also, cable operators have been sluggish to adopt dynamic ad insertion technology that will allow advertisers to insert fresh ads on the fly into VOD content. Advertisers are clamoring for such technology because it will make VOD a much more attractive advertising medium than it is today, when advertisers must provide their spots weeks or months in advance.

“In a time when nothing is changing or moving, any alternative to the model can only be positive,” said Mike Bologna, director of emerging communications for Mediaedge:cia.

In fact, Ms. Tancredi said she began formulating this new approach after a meeting a few weeks ago with Mr. Bologna and Rino Scanzoni, chief investment officer for GroupM, which owns Mediaedge:cia.

“Everyone wants to try to hit the broadcast or cable money as opposed to being carved out of new media,” Ms. Tancredi said. “We realized it probably makes more sense to compare ourselves to other networks than to try and sell against other VOD networks.”

Music Choice already works with VOD metrics firm Rentrak. According to Rentrak data, Music Choice reaches 3 million unique set-top boxes per month. That means that of the 22 million VOD homes with access to Music Choice, 3 million are tuning in each month to account for the 40 million orders.

Those numbers could be compared to the household viewing numbers for prime-time shows. “It’s a substantial number of individuals watching. Each one is watching 13 times on average,” she said.

Ms. Tancredi said she plans to work with Nielsen or another research firm over the next few months to develop the necessary research on ad recall and other metrics to pair with the VOD data. The goal would be to provide advertisers with a comparison on how VOD programs perform relative to a show on The CW, for instance.

“We will compare what happens to a Music Choice view to a ‘Gilmore Girls’ view, for instance,” she said. “The sooner VOD can integrate better into traditional buying, the better off the category will be.”

Music Choice’s efforts are a useful temporary approach until VOD usage estimates are reported as part of an overall means to measure video and audio content with comparable metrics, said Paul Rule, president of VOD research firm Marquest Research.

“Given the number of views, the number of set-tops that access their content and the number of set-tops able to access their content, they could calculate numbers that somewhat resemble the average, cume and share figures familiar to buyers of TV and radio time,” he said.

The Music Choice numbers would most closely approximate household viewing estimates, but some households in the sample could have more than one VOD-enabled set-top box, Mr. Rule added. Also, advertisers will likely want weekly data rather than monthly as well as time spent viewing. Those data pieces would allow buyers to more closely compare a VOD network to a national network, Mr. Rule said.

“Those are a lot of limitations, but if they and their ad-buyer prospects can live with them, Music Choice could present some metrics that could be somewhat comparable to what the media planning and buying folks are used to seeing,” he added.

This new strategy won’t be a watershed moment for VOD, but it can’t hurt, Mr. Bologna said. “They are simplifying things a bit,” he said. “The problem with VOD right now is it’s the lowest common denominator. You’re only as good as the slowest-moving guy.”

Still, Music Choice generates a nice amount of views and moves faster than most VOD networks, he said. That’s why Mr. Bologna has brought Media:edge clients Cingular, Paramount and Cadbury into the network.

However, other VOD-centric networks don’t plan to follow suit. The differences between broadcast and VOD are what help sell VOD, said Jeff Shultz, CEO and co-founder of Concert.TV, a broadband and VOD network that carries concerts. The network is in 17 million homes and went from having one advertiser at the start of last year to eight now, including Cingular, Visa, Target and Warner Bros.

“We focus on the differentiation between broadcast media product and on-demand media product. … We like to point out that it is differentiated from broadcast media,” Mr. Shultz said.

His pitch centers on the lack of clutter, since Concert.TV, like most VOD networks, only runs one ad per program. Also, VOD is a more flexible medium than broadcast, he said. Concert.TV can insert “brought to you by” or “thanks for watching” types of messages, he said.

Music Choice at a Glance

  • 24 of the top 25 markets reached, including New York and Los Angeles
  • llion unique set-top boxes reached per month
  • 40 million orders/views delivered per month
  • 15 percent of homes that have Music Choice VOD use it every month
  • 68 percent of the Music Choice VOD audience is in 12 to 34 demo

Source: Nielsen and Rentrak data provided by Music Choice