VOD Advertising Lesson
Anyone thinking about VOD Advertising might find an insight from this year's upfront market. An 'upfront' occurs when television networks pre-sell their upcoming shows to advertisers. In the May 16th edition of the Wall Street Journal on page B8:
For several years, cable channels have been siphoning ad dollars from broadcast TV. Now, many advertisers are contemplating shifting some dollars away from TV altogether toward the Internet and other media whose effectiveness is easier to measure.
All this means that even those cable networks that are on a roll may want to think twice about being overly aggressive with asking for price increases.
"Money is fluid this year…if cable or any television medium takes an overly aggressive posture, the money will move elsewhere," warns Elizabeth Herbst-Brady, a senior vice president at Publicis Groupe SA's Starcom media-buying unit.
How does this impact VOD Advertising? First, agencies don't really spend less total dollars. Instead, those amounts are fixed; pre-determined each year inside each advertiser's budget. Put another way: the total pie remains the same size. Second, the significant lesson for any new or growing ad medium is to understand that agencies decide the media mix. Or to put it another way, how large each media segment slice of the pie will be relative to one another.
Back on May 3rd, I concluded that marketers would begin spending less on traditional television in 2005, ultimately eroding over $20 Billion by 2010. That deterioration arises from the effects of DRV ad-skipping. Those ad dollars do not Disappear altogether.
Therefore, a well-designed VOD ad market can opportunistically capture some of that money. Failure to build an effective VOD ad market means that the $20 Billion will simply move completely outside of television.
Posted by admin on May 20th, 2005 :: Filed under IPTV
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