Ad-Supported Video: Problems and Speculations

Written on
Feb 1, 2006 
Kenneth Musante  |

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One of the exciting things about the rise in broadband use and the decline of television is the potential for free video entertainment online. Wait… let me rephrase… free ad-supported video entertainment online. Premium commercial-free video content is fine too, but a majority of people aren’t going to want to pay to watch video. The only reason people pay out of the nose for cable rather than sticking with broadcast TV is because cable offers a million times more static-free content than broadcast TV ever could – in spite of the fact that they still have to watch advertising!

The Internet is different. The amount of video content that can be made available online is limited only by the technology. And even though bandwidth is still ridiculously expensive, it is getting slowly cheaper, and there are also ways around bandwidth limitations (such as BitTorrent).

Attempts to market paid commercial-free online video content range from moderate success (iTunes video w/ the video iPod) to abysmal failure (Google Video Store). There are a few reasons why online video hasn’t taken off like a rocket (as it would if providers got things right).

First of all, to grip the hearts of red-blooded, blue-collar, broadband-using Americans, you have to offer content for free. There’s no other way. That’s not to say there isn’t a market for premium ad-free video. But to get the greatest viewership, you need free content. And free means ad-supported. And in this case “free” as in “beer” also means “free” as in “not DRM.”

I understand that TV and movie content providers are terribly paranoid about releasing video content they can’t control, but that paranoia is counter to the interest of the term “ad-supported.” When something is “ad-supported,” it means you want to reach as wide an audience as possible, and that means distributing content in simple standard packages that can be transferred and played back on any sort of device, copied, and shared. Streaming video is nice for shorts, but no one wants to watch a show in a little 500×500 window throughout their browser. There has to be a way to transfer it to the comfort of your TV.

I don’t mean to sound all mushy and liberal, but if you don’t have to pay a dime for distribution because viewers are sharing and distributing your content for you, you’re sitting pretty. All that’s missing is the technology to measure that type of distribution so you can tell your advertisers that your rates went up because you just gained another 10,000 viewers through some Norwegian file-sharing site. Yay capitalism!

Another thing that’s holding ad-supported video back is simply bad ad formatting. I’ve seen streaming video with ads that appear seemingly at random throughout the shows. Most online video is culled from TV, where there are natural breaks in the storyline specifically made for advertising. Why not use those instead of interrupting people with an advertisement in mid-dialogue? Even a regular old 30-second spot would work there.

And forcing interactivity with ads in video? Whose idea was that? Who wants to be forced to walk to their computer, and click the mouse instead of making a sandwich like any self-respecting TV junkie? Google had the right idea when they transformed website advertising with AdWords. The ads are clearly separated from the content, they’re not flashy and annoying, and if you like what you see, you can click on it.

Ads in video like that – with optional interactivity- like a string of ads across the bottom of the screen that you can click on, would be so much better. (Oh yeah, and make ‘em contextual so they correspond with whatever’s going on on-screen at the same time.) And not only that, but you can measure clicks. To make money, you don’t necessarily need to know the exact number of downloads your show had from that Norwegian website. All you have to do is keep track of the clicks.

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Reader Comments.

Our company has been growing for the last 6 years by placing gay and lesbian commercials in front of our free content. Does the review model work…ummm…duh!


Posted by Ted Trent | 7:44 pm on February 3, 2006.

Music Plus TV streams 24 hours a day and is just beginning ad insertion. Once ad buyers begin to realize that the number of visitors to a streaming video site compares very favorably to the numbers watching digital cable networks the momentum should shift.

Posted by Jeff J. | 12:56 pm on February 6, 2006.

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