More than a decade in, the Internet has altered the economic landscape and changed the buying habits of millions of consumers – but many brands still hesitate to shift the bulk of their ad budgets online. While interactive advertising budgets are growing fast, the gap between online consumption and online budgets is still closing very slowly. Piper Jaffray predicts online ad spending to top $80 billion by 2011 – which will still represent less than 9% of total ad spending. How can we break through to the next level?
In order to drive budget migration to the online sphere, the big brands need a mainstream platform. This platform goes beyond what we currently define as premium inventory. Such super-premium ad inventory would be the web’s equivalent to the Super Bowl, the Oscars or the Seinfeld finale.
These programs draw big-brand advertising budgets because of their premium entertainment and simultaneous reach. An ad at halftime of the Super Bowl is as much a cultural phenomenon as the Super Bowl itself; advertisers know that millions of people consume the same message at the same time, and they depend on this impact and the ensuing “water-cooler chat” the next morning. Major brands devote huge portions of their ad budgets to these pop culture events because their association with exclusive content, sought-after celebrities and premium entertainment puts their brand in a positive light.
By contrast, online advertising currently takes advantage of market segmentation and individual experience. This is extremely effective for lead-generation, but major branding initiatives rely on the perceived value-exchange that comes with premium, exclusive content.
As online programming trends further toward user-generated and highly-segmented content, a tremendous opportunity presents itself. Big-brand advertisers are open to the promise of the Web – the demand for premium ad space has already overwhelmed Yahoo’s inventory – but they’re still waiting for the online program that can deliver a sizable simultaneous reach comparable to its offline counterparts. In short, they’re in search of that super-premium inventory hat delivers a critical mass in reach.
The Convergence Is Coming
As technology continues to meet user habits, those programs are coming. Last month, former American Vice President Al Gore teamed up with MSN to produce Live Earth, a series of concerts that took place in seven continents over twenty-four hours. The event, conceived and produced to raise awareness of the global climate crisis, featured performances by top tier entertainers. Live Earth was the largest global event in history and broke the record for online viewership: MSN reports that Live Earth generated more than 15 million live streams. In the week that followed, the concerts were streamed over 30 million more times.
Live Earth could represent the future of premium content. Like broadcast media, it featured a broad reach and a simultaneous, shared viewer experience; but it also showcased some unique facets of the Web, such as its global scale and interactive capabilities, including user-uploaded content. Chevrolet and Phillips were among the global brands that took advantage of the opportunity to spread their messages to the audience.
We’re already seeing a greater convergence of content and delivery that will provide excellent branding opportunities in the interactive space. TimeWarner’s TNT and Walt Disney Co.’s ABC and ESPN recently agreed to pay the National Basketball Assn. $7.4 billion over eight years for the rights to televise NBA games and, in one of the first deals of its kind, stream action on the Internet and mobile devices. The digital elements account for a large part of the 22% increase over the current agreement. Basketball fans looking for their fix will be able to watch live games on TV, online through ESPN360.com or on their mobile devices via ESPN Mobile. Highlights will also be available on digital versions of ESPN’s signature shows. This increased access also translates into expanded inventory opportunity for advertisers.
As more deals of this kind take shape, so will the convergence of mass audiences and premium content that creates super-premium ad space. Traditional broadcast networks are already producing web-only content and pop culture stars such as Tom Green have launched live, recurring, web-only programming, and with deals such as News Corp.’s acquisition of Dow Jones, we will see even more online programs that create good value for users. Additionally, new devices such as IPTV increasingly blur the line between online and offline entertainment, accelerating viewers’ online migration. And where the viewers go, so go the ad dollars.