Uncommon Wisdom

Apr 5 2010   1:52PM GMT

Advertising industry gets serious about online ad model

Tom Nolle Tom Nolle Profile: Tom Nolle

There are some indications that the advertising industry is getting serious about just what an online ad model should be. Part of the drive has come from things like TV Everywhere, which tends to present online advertising as an extension of standard TV commercials. In one respect this may be not only an important advance but an essential one. There’s not much chance the industry would threaten an established model with an unproven one.

On the other hand, targeting precision in online advertising is now (via interactivity) moving into the traditional TV space, and the current TV model doesn’t accommodate targeting in ad pricing. Revenue from ads is critical to content success, and while it’s not been established that there is a superior model (relative to the current commercials model), it appears that there are some in the industry who would like to see some proof points on that issue.

Online video probably can’t drive that alone, but with increased interactive targeting from smarter STBs now imminent, there’s a good chance that future experimentation with the ad revenue model will develop. However, our model says that in the near term the uncertainty will combine with continued economic pressure to reduce adspend and limit content production—probably through 2012.

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