Cheaper to run TV commercials on the internet Lara Sinclair | March 09, 2009 Article from: The Australian
AN unprecedented fall in the cost of running TV commercials online is adding to the pressure on TV network revenues and making it easier for advertisers to redirect their budgets to the internet.
Media buyer Gary Hardwick told a broadcasters' forum in Sydney last week that until recently, online video was twice as expensive as TV advertising on a cost per 1000 basis, but increased competition and better technology meant it had now reached parity with TV.
Mr Hardwick, who founded media agency Ikon and chairs the Media Federation of Australia, said many advertisers were now quarantining a portion of their TV budget to spend online to extend the reach of their campaigns.
"What we are seeing is online video coming down," he said. "We are seeing the same CPMs (the cost of reaching 1000 people) as commercial TV. That's never been seen before."
Cost parity, combined with better online TV players, new video advertising positions on premium sites and more competition from new entrants is likely to see tens of millions of dollars shift to online video formats this year.
Last year research firm Frost & Sullivan estimated online video revenues reached $17 million for the 2008 financial year, or 4 per cent of the internet display advertising market. Some sources estimated the sector was twice that size by the end of last year.
News Digital Media commercial director Ed Smith said advertisers might look at putting 10 per cent of their TV budget online to reach what he called the "second prime time" of online viewing in the mid-morning, lunchtime and mid-afternoon timeslots.
NDM, part of News Limited, publisher of The Australian, launched a rich media player on its sites last year. The player enables it to run video ads in traditional brand advertising positions, such as medium rectangles, rather than as pre-rolls in videos, expanding its inventory.
"Last year for us online video was a niche product on the pre-roll of our videos and we don't even do much video content," Mr Smith said.
"Now that we have this rich media player, online video ads are worth millions of dollars a year to us. It's exponential growth. For broad run-of-network campaigns you can get pretty close to those TV CPMs."
Two weeks ago NDM joined internet advertising delivery firm AdStream, which delivers commercials to the TV networks. At the touch of a button AdStream can now send the same material to NDM, reducing production and formatting costs. "The ads come to us, just like they come to a TV network," Mr Smith said.
Newer players are also getting in on the action, bringing behavioural targeting technology to online video commercials.
Last year internet advertising network AdConion began a push to launch an online TV channel called AdConion TV in Australia. It aimed to move internet TV shows out of the portal environment and on to the hundreds of niche websites across which AdConion sells advertising by using an expandable video player.
The content is also targeted to users based on their previous surfing behaviour, meaning sports fans could be served online sports shows even when they were not on sports websites.
Mr Hardwick said Ikon commonly briefed 11 different companies when booking online video campaigns.
Universal McCann chief Henry Tajer said his agency had sorted the available online video inventory into 10 channels based on subject matter, such as news, sport, fashion and lifestyle, under the banner UMTV. The agency's clients, which included Unilever, Sony Pictures, the federal Government and Microsoft, had been using it for the past three years.
