Online advertising

New cable ad platform — EFIB — set for launch

The cable industry’s advertising consortium, Canoe, is launching its ad exchange and interactivity platform (Enhanced Binary Interchange Format, which it calls EBIF — catchy, huh?) This format will allow TV advertising to be as precise in terms of demographic targeting as in online advertising, and also support viewer interactivity to get more product information or even request contact.

In short, EBIF largely eradicates the difference between what you can get with online ads and what you get with TV ads. This shifts the whole TV/online battle (particularly in video) to the question of who and when you get them. Online video will need to sell itself based on its ability to attract users who aren’t as accessible on TV. On demand is a part of that, but only as long as the cable companies and networks don’t turn more to video on demand (VoD) for the mission. It will take about a year for this to gel, in our view, so there’s some time for the online markets to think up a counterpoint.

Comcast’s TV Everywhere: Credibility with advertisers

Comcast says that it’s no more than 60 days from rolling out TV Everywhere throughout its service area. The project is in trial now and has already signed up 24 networks to supply content. We believe this is a critically important model for streaming video because it has credibility with advertisers, and these guys are the critical ingredient in any video strategy.

We still believe that TV Everywhere would benefit from some non-aligned authentication source, or from a system of federation run by the networks that contribute the content. Still, even in its current form, it offers the first chance at dodging the problem with ad sponsorship in online video—the “too-few-eyeballs-for-interest” problem. This makes streaming content an incremental viewing source to traditional TV.

Online advertising tied to privacy concerns

Some of the issues in the debate over whether targeted ads are so much more valuable that they might increase net ad spending are coming to a head around the privacy legislation being proposed. Some online advocacy groups are opposed to explicit privacy regulation because they believe the regulation might make it impossible for improved ad targeting to increase online ad value.

Today, online ads are about a fifth as valuable as conventional ads at best, which means that the transition from a legacy ad strategy to an online ad strategy could reduce ad-spend by that proportion.

The goal of the targeting process, say proponents of a regulation-free market, is to push that value up. Besides the obvious question of whether such a push justifies loss of privacy, the position flies in the face of advertiser comments. Better targeting, advertisers say, is a way to spend less overall. Thus, they never expect ad value to grow as fast as number of targeted users would shrink.

It’s becoming increasingly obvious that funding content in a pure online world will be difficult because of the reduction in available ad dollars that online will necessarily create.

Online viewing: New study points to the issues

A new piece of university research shows that TV still has the largest eyeball share by far, and in every demographic group. Online video accounts for only a half-percent of viewing time overall, in fact. Computer video commands less than half the time that console gaming does.

All of this proves that the impact of online video on advertising and TV is indirect and not a matter of stealing eyeballs, as some suggest. We believe that the study validates other material we’ve cited here in the past and shows that the notion that online video advertising is the future of online revenue is, at the very least, far from fulfillment.

This is significant first because it means a lot of startups are probably doomed and YouTube will probably not monetize effectively. More significantly, it means that ad revenue can’t be expected to bolster Internet bandwidth growth, even if we figured out how to flow some of it to the ISPs. Ad revenue loss, partly to online, is indeed a problem for TV, but grabbing online video ads won’t be anyone’s solution.

TV interactivity: Hot trend or hot mess?

Interactivity in TV is being touted as being a plus for IPTV, or maybe it’s for True2Way, or maybe for digital TV. Any time you see this sort of “smearing the buzz” phenomena, you know something’s hot, and interactivity surely is.

True, there is a rush to make it a differentiator in the TV space (Verizon’s widget program is an example), but a bigger question might be whether this rush to interactive TV will have an impact on online advertising. Some interactive concepts, like Yahoo’s widgets, can be incorporated in a TV set (or set-top box, in theory) and provide a link between TV and online, which could be good.

Some interactivity could make television commercials interactive, which could be bad for online advertising because it could steal a differentiator. All this continues to point out that we have a game of musical chairs here, with a lot of applications and industry players looking to sit down on about $700 billion in total global adspend. No matter how many bottoms are involved in this game, the dollar size of the seats isn’t going to change.

Yahoo still looking at deals

Yahoo’s board may be looking inside itself for the next CEO, hoping to get someone who can manage the company effectively without a learning curve, as well as someone who can deal with Yang, who is expected to be a difficult partner to any new CEO.

Yahoo is also still considering an AOL deal, apparently quibbling over how much of Yahoo Time-Warner would get for the deal. All the time this goes on is time lost for Yahoo, which is clearly rudderless in the period of transition and at risk in a market where display ads are becoming less relevant. That, in our view, is partly because Yahoo is becoming less relevant. Icahn, it is reported, opposes the partial sale of Yahoo (presumably to Microsoft) in favor of something he hopes would be more lucrative.

AOL profits way down; Time to sell

Time-Warner’s AOL unit saw profits fall by 26%, and has been in talks to split and sell off AOL to boost the parent company’s financials. The drop in AOL’s fortunes came not because of a shift from an access model to an ad model per se, but because of the shift to broadband Internet.

Broadband is not an ISP business; it’s an access carrier business. However, the fate of AOL as a portal is linked to broader problems on the Internet, which include an increased polarization of sites as search, entertainment or social networks. There are strong incumbents in the first space. The second is yet to be proved as a source of financial gain, and entertainment is where everyone who isn’t a search player wants to be. Crowded markets don’t make money for anyone, and the faddish nature of Internet viewing won’t help. T-W should sell AOL off now while it can.

Microblogging: Trouble for network bandwidth?

Twitter, the “What are you doing” less-than-texting concept, is gaining a lot of buzz, users and funding. Monetizing any social network has proved difficult, and Twitter’s simple approach makes it harder than usual to see how ads might work there, but it still raises a troubling question for networks. Is the real service of the future more signaling than bandwidth? Clearly you can’t be twittering video stuff to each other; and few people have the time for an activity that must occur regularly and also consumes a lot of capacity.

If casual social microblogging is the prototype of future services, then network bandwidth and bandwidth production could be in deep trouble. We believe that the telco side of the market needs to be thinking about how to make casual bit-intensive activities as attractive as short text messages and blogs, or face some unpleasant consequences.

Mobile providers join to launch targeted ad service

Five unnamed mobile service providers have joined with ValueClick to launch a service that targets better demographic targeting of mobile ads. The mechanism used for ad selection is heavily linked to behavioral targeting, and it seems clear that the move is the long-awaited move by some mobile operators to gain some traction for themselves in the mobile advertising space. However, the ValueClick partnership doesn’t necessarily provide them the means of truly controlling their destiny, and we believe the mechanisms used in the trial (at least from what has been described) to be primitive. This comes as an analyst firm predicts that mobile search ad revenue will reach nearly $5 billion by 2013.

Google video ad trials - the clueless approach

Google has launched a trial of its controversial banner-add-on-video strategy, and we believe the step shows the extent to which the online content ad process is detuned from market reality. The approach has continually been shown to be offensive to viewers of video, far more so than the ever-offensive banner ads on web pages. In addition, it shows that Google has no real notion of how to address online content sponsorship other than to try to replicate the banner-and-click approach, and that is not attuned to the current broadcast TV advertising paradigm. Google also plans to put video ads on search result pages, a step that is likely to further clutter the search results and create more user angst.