Big Studio Involvement in Online Video Takes a Step Forward

Joost Boost Worth $45 Million (free registration required)

The concern over Big Media's ability to control distribution of their content online should be more possible with the launch of Joost, the new online TV-cum-social networking start-up that is sure to get more blessing (and money) as they evolve. Not only have they received money from CBS and Viacom in this round, but they already have content agreements in place with Warner Music, National Geographic, Turner Broadcasting, The Cartoon Network's Adult Swim, CNN, Hasbro, the NHL, Sports Illustrated and Sony Pictures Television.

This looks like the VOD model they've been talking about for 15 or so years, only online instead of through your cable or satellite provider. The key differences between Joost and GoogleTube are (1) Professional media companies provide the content, not regular folks; and (2) it will focus on long-form programming (half-hour-plus), as opposed to short-form videos (under 15 minutes).

The key to this taking off, in my view, is the ability to watch Joost through your TV set, the ultimate lean-back medium, as opposed to watching it through your computer, a lean-forward medium. This will get easier as HDMI connections on TVs and ever-faster broadband Internet connections become more common. I'm not positive how fast the video stream has to be for the quality to approximate current 525-line standards, let alone HD, but it has to be faster than current 384 kbps standard.

Video, Schmideo -- D1SPLAY RULEZZZ!!!

There's no doubt about it -- video might be on the cutting edge, along with other 2.0 buzzworthy strategies like RSS, podcasts, blogs and the like -- but after house list email marketing and the low-hanging fruit of search, display advertising is still planned to be larger than any of the others, even in 2007. This in eMarketer:



And even though rich media spending is growing incredibly and display spending is topping out, it won't be until 2011 when rich outstrips display:



People just like to stick with what's familiar and easier to manage. When rich becomes as easy to manage as display, that's when the tipping point will really occur.

Click and Buy in Online Video: Fine Idea, Limited Execution

This BizReport story says that Kohl's has become the first advertiser to to use MSN's new VHL (Video Hyperlink) technology. (Microsoft loves those cool little three-letter extension handles.) When you're watching an MSN video (actually, a Kohl's video on MSN Movies site) and an item on sale at Kohl's come onto the screen, a big green arrow starts flashing in the lower right hand corner. That's your cue to mouse over the items for sale and click it. At that point the video pauses, and another browser window pops open to the Kohl's site to the page where you can purchase the item.

It's a cool technology and the idea is almost as cool as the technology -- you can see the video in action here. This execution does have some limitations, however:

• People have to want to view a promotional video, such as a Kohl's marketing video, to see it in action. This is probably not a practical application for content-oriented video.
• In this video, you have to move quickly, say within three to four second, to click on the item or it's gone, and it takes a while to figure out how to go back and see something you like again. (Just clicking on the time status bar behind the current point won't do it.)
• In addition, the model in this video is always moving, so it's easy to click and miss.
• The video gets interrupted, which hurts the flow of the experience.
• You can't click on the green arrow and choose the featured item on the video -- they should consider allowing that.

All in all, it's a good first effort, and I can't imagine it won't improve with subsequent executions.

Viral: It's Not For Just Anybody Anymore

So says this Mediapost article (free registration required). A Dynamic Logic survey reveals that 50% of over 1,000 respondents in the marketing field think of viral marketing as a fad, whereas only 24% think of it as a marketing strategy with traction.

I've thought for sometime that successful viral campaigns are like catching lightning in a bottle. It is extremely difficult to predict with any level of certainly that something you create might catch on with your audience so strongly that they forward it to all their friends. Marketing viral is particularly tricky in this regard because no one wants to look like a marketing tool to their friends, so advertisers either have to mute their brand identity in the campaign -- which obviously defeats the purpose -- or they need to do something to take the "brand hero" aspect down a notch, such as injecting an ironic twist into the execution.

But because successful viral relies on insight into zeitgeist -- knowing the exact right mood at precisely the right moment -- it seems more likely that these campiagns will happen at best by hunch, and at worst by accident, than by careful planning, which by definition is a process that takes place over time. That, I think, may cement the idea that successful viral marketing is lightning in a bottle.

I also wonder whether there's a little bit of wishful thinking on the part of marketers in this survey as well: perhaps if they call it a fad, they can convince their management or their clients that it's not reasonable to ask for it, thus removing the likelihood of being set up for failure.

Social Networking Goes Niche

As titled in this Business Week article.

The gist is that more people are getting turned off at the overt openness of MySpace, where basically anyone can reach out to you (except if you're a teen, in which case you can put up a wall), so social networks that allow you to control exposure of your profiles to others are gaining traction. The article names Vox as an example of just such a niche network.

I see MySpace as filling a fundamentally different need than Vox. MySpace is all about widening your circle. It's a place where kids can connect with other kids from far-flung places, to help mitigate the isolation they feel as their parents place ever more restrictions on their mobility in response to our increasing media and news culture built on fear of strangers and of The Other. Young people, therefore, would like as many contacts as possible. It also makes them feel popular if they have 100,000 "friends" in their network.

People like the protagonist in this story, who fled MySpace for Vox, want to use social networks in a different way: to strengthen ties with the contacts they already have, and to broker, and have brokered, contacts with only those new people with whom they share common interests or purpose.

But there's another thing not being addressed by this article: is another reason people are fleeing MySpace that there's just too much advertising and storefonts being put up there? I can easily envision such backlash against this marketing tactic causing the sun to set on it in the next year or two. And if that happens, what would justify continued investment in broad network platforms like MySpace?

Online Leads To Offline -- And Vice Versa

I've seen numerous articles suggesting that online research leads to offline purchases, but this is the first article I've seen suggesting that exposure to offline advertising leads to online searches.

This makes perfect sense -- I can easily recall instances where I've done the same thing -- but this is the first I have seen this idea articulated in trade press.

This is based on research by the Retail Advertising and Marketing Association, representing a category that currently does most of their advertising offline.

Another Ad Network Gets Busted

This time it's TMP (TrafficMarketPlace), as a user alleges that Travelocity and Cingular are still serving ads through malware. As I mentioned in this post, that's how it happens to major advertisers, and surely they know by now that it happens this way.

I pulled my company's advertising out of TMP because we suspected some funny business from one of their affiliates. We experienced a sudden spike in impressions, no increase in clicks, CPAs going from about $5 to hundreds of dollars in a single day. We suspected impressions fraud. We went round and round with TMP to try to get a resolution in place, then all of a sudden, my rep left, her spot was not backfilled, and the VP of Sales became suddenly unavailable. We ended up simply not paying for it, and ultimately not working with them anymore.

And now this.

Viacom Sues Google -- Now What?

Everyone knows the what, and few people are surprised, although the amount does make one giggle in shock -- but what does this mean?

The core legal issue here is the "Safe Harbor" provision of the Digital Rights Management Act, which indemnifies online service providers when their users infringe copyright law by storing protected materials on their servers. The idea is that there's not much a provider can do to stop the individual, so only the individual is liable, not the provider.

What Viacom maintains is that, in this case, YouTube is profiting from the infringing materials, so Safe Harbor doesn't apply to them. Viacom has demanded that YouTube remove some 100,000 pieces of copyrighted materials from their servers, but YouTube is just not moving fast enough in bringing them down, nor are they proactively preventing users from uploading new material.

YouTube responds that they do not allow advertising on user video pages, in order to comply with the spirit of Safe Harbor (that is, not profit directly), although one could easily maintain that existentially, YouTube profits when the system is widely known to allow protected material. In practical terms, that means that if I remember a great "Family Guy" bit and want to see it replayed, I know I can get it on YouTube -- and as of today, that's still true. (Careful when clicking on this link -- this clip could be construed as very disturbing for some people.)

OK, so now what the technical issue is and what it means, but what does this lawsuit really mean? On the one hand it's hard for Google to control their users. If their users infringe, they're gonna infringe, so what can they do? That's not a good argument, says Viacom -- it's your service, you're making money off these videos, so we want our cut, and if you can't pay us, then take them off -- and it's up to you to figure out how.

Google is reported to be working on a search function to identify protected content on both Google Video and YouTube, but they're not there yet. So what can they do in the meantime? Go to signup-only model so they can control users better? That could cut down their reach significantly. Review every video that users upload? That would create a backlog months long, on the optimistic side.

When you get right down to it -- meaning using your "follow the money" instincts -- this must have something to do with the failed negotiations between the two parties to allow YouTube to carry Viacom clips. Google apparently wasn't going to pay Viacom to their satisfaction, so Viacom might very be using this lawsuit as a negotiating tool. Pay us now, Google -- or you'll pay us later. But either way, you're going to pay us. (Wow, maybe the "Family Guy" clip is a propos, after all!)

I predict the lawsuit does not proceed to fruition. It can't -- YouTube risks sinking an entire online marketing channel if they fight and lose. Google will settle, and it'll cost them.

Show Me The Metrics! (What, is it 1996 already?)

IAB: Better metrics would increase online ad revenue

A survey co-sponsored by the Audit Bureau of Circulation and NSON Opinion Research confirms that advertisers would spend more money online if only the metrics came from an independent third party auditor. My self-interest detector is going off, but as an advertiser, I can vouch for the validity of this.

I think this is a good news/bad news situation for online publishers. Better metrics by third parties will lead to more spend, so the investment will for the most part be well worth it. The bad news part is two-fold: (1) Third party metrics and auditing cost a boatload of money, and (2) not a few publishers would go belly up as their sham self-reported visitor numbers are exposed for all to see.

Walled Garden Down, Ad Revenue Up

AOL has profited handsomely by moving from a subscription-based revenue model to an ad-based revenue model, and the proof is in this Mediapost article (free subscription required).

I don't think anyone is too surprised that this might occur, but the article might lead one to believe that all the growth comes from AOL.com, specifically. I was questioning that, and the article is silent on it, leading me to wonder: how much of this revenue growth comes from network cash cow Advertising.com?

One amusing part of the article is toward the top where they say:

"The Time Warner unit's decision last year to replace its ailing subscription model with a free service supported by advertising resulted in a 454% surge in billings from 2005 to 2006, compared to a 142% increase in portals overall."

Gee, this makes 142% sound so paltry. But seriously, it is good to be a portal, as Jeff Lanctot at Avenue A confirms in this ClickZ article.

And On The Flip Side of the Online Video Spectrum:

NBC Poised To Sell Digital Downloads. (Free registration required.)

Here's the latest attempt by Big Network TV to generate revenue directly from consumers for their standard TV offering. They'll be selling flotsam like five-minute video clips of SNL for a buck ninety-nine, although you'll also be able to buy sketchy-quality videos of shows like "The Office" as well.

I predict this will not work in the long-term -- meaning sustain a profitable SKU for anything longer than a year -- for the opposite of many of the reasons I elucidated in my preceding post.

The Most Successful Online Video Event So Far ...

... has got to be CBS March Madness product, located here. When they first came out in 2004 in conjunction with CSTV, it was as a $19.95 subscription. Starting last year, CBS started offering it free to viewers, with the cost underwritten by advertisers.

Now that's really starting to bear solid fruit: this Mediapost story (free registration required) reports that revenue has gone to $9 million this year, over double that of last year's $4 million, with advertisers such as AT&T's wireless unit, Kraft Foods and DiGiorno buying into the fun.

I can think of four key reasons why this specific online video offering has become so successful:

1. It's an event. March Madness has become the #1 sports event in America, and it generates a significant amount of low-level non-professional (and professional) gambling. So there's a lot of intense interest inherent in it. (I love serendipitous assonance.)
   
2. It's sports, a top avocation for the heaviest users of video, young men.
3. It's free. Appealing for obvious reasons.
   
4. It's a viable alternative to nothing. This is not an insignificant point. I would be willing to bet that the vast, vast majority of online video viewership of March Madness comes in the early rounds during weekday day games, when most people are at work and have no alternative method of or access to viewing games. Once you get later into the tourney -- specifically, Sweet Sixteen -- every game is on TV anyway, and plays at night or on weekends. The chances you'll be watching a relatively grainy online video versus watching the same game on better-resolution TV, especially hi-def, has got to be nearly nil.

If proven correct, then the implication here is that people respond to scheduled video events that are special in nature and not otherwise available to them. This is not the same viewing psychology as watching UGC on YouTube, or catching up on the latest 30 Rock on NBC.com.