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Internet Week Turnout Proves Web Is Growing Fast

Jun 8, 2008  •  Post A Comment

The line snaked around more than two city blocks in Brooklyn. Eager fans waited anxiously, hoping for admission into a prized event on an early June evening.
They weren’t lined up to see Miley Cyrus perform or to catch a glimpse of Patrick Dempsey. Instead, they were waiting for Kevin Rose and Alex Albrecht, the stars of one of the most popular Internet TV shows, “Diggnation,” who were slated to do their show live that night from the club Studio B in Brooklyn.
The Revision3 show, in which the two guys sit on a couch with their laptops, drink beer and discuss the most interesting stories from popular Web site Digg.com, draws about 1 million downloads each month.
The “Diggnation” taping was one of many events held in New York last week during the city’s Internet Week, a series of events, conferences and parties celebrating the Internet business.
The week’s festivities drew executives from across the Web video spectrum as well as technology firms, Internet video producers and Web stars.
Other live tapings of “Diggnation” have occurred in London, Amsterdam and San Francisco. The turnout at those events—some have attracted as many as 1,200 attendees—and last week’s in Brooklyn is the latest sign of the growing impact of Internet video on consumers and advertisers.
Advertising in streaming video is the fastest-growing segment of the interactive ad market and should hit sales of $7.2 billion in 2012, according to Forrester Research. That’s up from $471 million in 2007.
Those dollars are flowing because consumers are glomming onto Web video and Web stars, like Mr. Rose and Mr. Albrecht. Forrester reports 67% of Internet users watch online video in a typical month.
Some of those viewers made the trek to Brooklyn last week. In fact, opening act Brian Brushwood, a magician and the star of Revision3’s new show “Scam School,” remarked prior to the taping that one person in line boasted he had quit his job when his boss wouldn’t let him off work to attend the “Diggnation” event.
Estimates varied on the number of attendees, but Revision3 CEO Jim Louderback said the 2,000-capacity venue had to turn people away.
Many of those fans and plenty of others now watch TV only on their computers, tuning out cable service or over-the-air TV to watch ABC’s “Lost” and Web-only shows like “Diggnation” online.
As more consumers shift their viewing to the Internet, TV networks will need to adjust their advertising strategies to make up for potentially lost revenue, Forrester analyst James McQuivey said in a report. Right now networks are earning a 50% or higher cost-per-thousand-viewers (CPM) rate from advertisers with online video over TV, or about a $40 CPM on average, with the most popular shows pulling in $60 or $70 CPMs online. But even with an increase in CPMs, networks likely still will need to add more ad units to their streaming video, Mr. McQuivey said.
TV networks are starting to devise strategies to adapt. “I don’t see there being a huge battle in transferring that from TV to the Web,” said WE tv executive producer Kelly Hefner at a breakfast session on how consumers use new technology during Internet Week. “The key to monetizing is in sponsorship and intelligent, story-driven integration.”
Sponsorship or host “shouts-outs” are popular in online video shows. That ad style is less obtrusive than a pre-roll ad, meaning viewers are less likely to fast-forward through it and more likely to make a purchase.
But “shouts-outs” don’t work for everyone. Natali Del Conte, the host of CNET TV’s “Loaded,” said during that same breakfast panel that she can’t do those sorts of ads on her show. “I can’t say how much I love this Nokia, for instance, because I am a journalist. We have to have pretty strict boundaries.”
Instead, CNET TV is exploring new types of online ad formats to offer to sponsors, she said.

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