Internet Video Revenues: Some Questions and Answers
Our press release from December 7 ("Annual U.S. revenues from Internet video services will exceed $7 billion by 2010") has resulted in some interesting questions coming to us from the press and our clients. We appreciate the feedback and the interest in the findings from Internet Video: Direct-to-Consumer Services.
We've had some insightful questions about the direction of the Internet video advertising revenues. Since it's a subject that many of you probably have strong interest, we'll share our thoughts in the blog. By the way, this report was a big team effort from us - thanks to Michael Cai and Harry Wang for their perspectives!
Question: What's the revenue forecast for Internet video advertising?
Answer: Annual revenues for Internet video advertising in the U.S. market will grow threefold between 2006 and 2010 to approximately $4.4 billion in 2010.
Most of these early advertising dollars will be generated from non-embedded display ads on different video streaming Websites. Later, as the inventory of high-quality embedded advertising increases, we’ll see that ad revenue grow to surpass the non-embedded ad dollars.
Question: Who are the major advertisers?
Answer: The advertisers have been a mix of many of the companies who traditionally have spent much on primetime spots in the past. For example, ABC now has a group of 36 companies who are supporters of their ABC.com streams (in November, ABC reported that it has streamed 19 million episodes of delayed primetime shows since it began its experiment in May). ABC’s advertisers have included AT&T, Century 21, Cingular, Disney Pictures, Ford, Honda, Johnson & Johnson, JP Morgan Chase, Masterfoods, Nissan, Procter & Gamble, Red Lobster, Remax, Royal Caribbean, Sears, Sony, Sprint, Subway, Toyota, Unilever, Verizon Wireless, Verizon DSL, and Visa.
Question: Who are the major publishers?
Answer: All of the major Web portals and media companies are considered major publishers. Google, MSN, and Yahoo! are all enhancing their ad networks and ad serving technologies. Other incumbents include AOL with Advertising.com (AOL acquired Lightningcast.com in May 2006), Doubleclick (June 2006 acquisition of Klipmart), Valueclick (announced a partnership with EyeWonder in August 2006), Vitalstream (acquired Eonstreams in May 2006), and Comcast and Turner Broadcasting (which announced a strategic investment in ViTrue, Inc.) These incumbents are making acquisitions or strategic investments in order to become one-stop shops for rich media advertising solutions. Other rich media ads solution providers worth noting include United Virtualities, Eyeblaster, Viewpoint, Tremor Media, Postroller, Zedo, and ViewStart.
Question: What kind of advertising is running?
Answer: The increasing interest in broadband video advertising is encouraging industry players to introduce innovative business models and technology solutions. YouTube, the leader in user-generated content, is planning its online ad strategy around sponsored channels, which allow advertisers to participate in the online community instead of being viewed as intrusive annoyances. VideoEgg, an online video solution provider for social networks, is leveraging opt-in tickers and banners embedded in video streams to invite viewers to click through (a model proven by TiVo with DVRs). In addition, Vidavee is introducing a hot mapping technology, which identifies the most popular segment within a video for advertisers to insert their messages.
There are primarily three kinds of Internet video advertising, including pre-roll (also known as in-stream), in-banner, and transitional (which includes both interstitial and post-roll). Currently, the majority of online video advertising revenue is generated from in-banner video ads. Most online Web sites and publishers support in-banner video ads, but such ads produce the lowest response rate since viewers do not have to watch them in order to access content on the Web site. In-stream and transitional video ads are more effective at generating click-throughs. However, these two formats need to attach to videos, and the providers are just now building up their inventory of high-quality ads.
Question: How has online distribution of primetime TV offerings boosted ad revenue for the networks?
Answer: Right now, we can point directly to what the network executives are saying in their earnings releases. For example, Robert Iger, President and Chief Executive Officer for the Walt Disney Co., indicates that the CPM for adults age 18-49 on the ABC.com ads is 4x what they’re getting for primetime advertising. Ad retention rates for the ABC.com services are incredibly high (upwards of 85%), and ABC indicates that revenues from their Internet programming and downloads could total approximately $700 million in fiscal 2007.
Also, Scripps Networks, which operates such broadcast channels at The Food Network, HGTV, Fine Living, and DIY, announced that 10% of its revenue is coming from online sources, most of it advertising.
We've had some insightful questions about the direction of the Internet video advertising revenues. Since it's a subject that many of you probably have strong interest, we'll share our thoughts in the blog. By the way, this report was a big team effort from us - thanks to Michael Cai and Harry Wang for their perspectives!
Question: What's the revenue forecast for Internet video advertising?
Answer: Annual revenues for Internet video advertising in the U.S. market will grow threefold between 2006 and 2010 to approximately $4.4 billion in 2010.
Most of these early advertising dollars will be generated from non-embedded display ads on different video streaming Websites. Later, as the inventory of high-quality embedded advertising increases, we’ll see that ad revenue grow to surpass the non-embedded ad dollars.
Question: Who are the major advertisers?
Answer: The advertisers have been a mix of many of the companies who traditionally have spent much on primetime spots in the past. For example, ABC now has a group of 36 companies who are supporters of their ABC.com streams (in November, ABC reported that it has streamed 19 million episodes of delayed primetime shows since it began its experiment in May). ABC’s advertisers have included AT&T, Century 21, Cingular, Disney Pictures, Ford, Honda, Johnson & Johnson, JP Morgan Chase, Masterfoods, Nissan, Procter & Gamble, Red Lobster, Remax, Royal Caribbean, Sears, Sony, Sprint, Subway, Toyota, Unilever, Verizon Wireless, Verizon DSL, and Visa.
Question: Who are the major publishers?
Answer: All of the major Web portals and media companies are considered major publishers. Google, MSN, and Yahoo! are all enhancing their ad networks and ad serving technologies. Other incumbents include AOL with Advertising.com (AOL acquired Lightningcast.com in May 2006), Doubleclick (June 2006 acquisition of Klipmart), Valueclick (announced a partnership with EyeWonder in August 2006), Vitalstream (acquired Eonstreams in May 2006), and Comcast and Turner Broadcasting (which announced a strategic investment in ViTrue, Inc.) These incumbents are making acquisitions or strategic investments in order to become one-stop shops for rich media advertising solutions. Other rich media ads solution providers worth noting include United Virtualities, Eyeblaster, Viewpoint, Tremor Media, Postroller, Zedo, and ViewStart.
Question: What kind of advertising is running?
Answer: The increasing interest in broadband video advertising is encouraging industry players to introduce innovative business models and technology solutions. YouTube, the leader in user-generated content, is planning its online ad strategy around sponsored channels, which allow advertisers to participate in the online community instead of being viewed as intrusive annoyances. VideoEgg, an online video solution provider for social networks, is leveraging opt-in tickers and banners embedded in video streams to invite viewers to click through (a model proven by TiVo with DVRs). In addition, Vidavee is introducing a hot mapping technology, which identifies the most popular segment within a video for advertisers to insert their messages.
There are primarily three kinds of Internet video advertising, including pre-roll (also known as in-stream), in-banner, and transitional (which includes both interstitial and post-roll). Currently, the majority of online video advertising revenue is generated from in-banner video ads. Most online Web sites and publishers support in-banner video ads, but such ads produce the lowest response rate since viewers do not have to watch them in order to access content on the Web site. In-stream and transitional video ads are more effective at generating click-throughs. However, these two formats need to attach to videos, and the providers are just now building up their inventory of high-quality ads.
Question: How has online distribution of primetime TV offerings boosted ad revenue for the networks?
Answer: Right now, we can point directly to what the network executives are saying in their earnings releases. For example, Robert Iger, President and Chief Executive Officer for the Walt Disney Co., indicates that the CPM for adults age 18-49 on the ABC.com ads is 4x what they’re getting for primetime advertising. Ad retention rates for the ABC.com services are incredibly high (upwards of 85%), and ABC indicates that revenues from their Internet programming and downloads could total approximately $700 million in fiscal 2007.
Also, Scripps Networks, which operates such broadcast channels at The Food Network, HGTV, Fine Living, and DIY, announced that 10% of its revenue is coming from online sources, most of it advertising.
posted by Anonymous at 11:53 AM
0 Comments:
Post a Comment
<< Home