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A Rallying Cry For Ad-Supported Video

  |  September 19, 2006   |  Comments

Film and TV companies have made the jump to online video distribution. Now let's take it a step further.

For some time, I've been advocating ad-supported video in iTunes. I've watched how the major TV networks have cautiously adopted content distribution online. They've made deals with iTunes, where people can purchase some of their content. And they've launched video streaming sites where consumers can access other content. But my urging has been based on the idea that consumers would likely be willing to view advertising in exchange for discounted or free content. It seems such fertile ground. I'm surprised there haven't been more tests on the model.

However, late last week CBS and Comcast announced they will introduce free, on-demand episodes of primetime CBS shows for Comcast Digital subscribers. This is a change from the previous offering where subscribers could access the content for $0.99 per episode. "Video on demand has fundamentally changed the way people watch TV. Our customers have watched more than three billion ON DEMAND programs in addition to their regular linear TV viewing since 2004," said Brian Roberts, chairman and CEO of Comcast.

I applaud this effort and look forward to seeing its success spur other content providers to follow the model.

As you've probably heard, iTunes now offers full-length movies for download. They're pricing movies from $9.99 to $14.99. While I believe this will be successful, I can't help but think how much more successful it would be if the downloads were ad supported.

Cam Beck, an information architect at my company, decided to try it out. Here's what he had to say about iTunes' new offering:

"To my delight, the process was just as easy as downloading a song, but true to their promise, it actually did allow me to start playing the movie a minute after I started the download. On the downside, the playback on my PC laptop was a little choppy."

"Unfortunately, with my high-speed connection at work, the download actually took one hour, not the 30 minutes promised by Apple. That might have happened because a lot of people were trying it out, and that slowed down Apple's service.”

"I was also interested in experimenting with portability. As of right now, it's not possible to burn a playable DVD from iTunes, but I was able to back up the movie to a DVD and then restore it on my Mac at home. Although this process was very easy and might be something I would do regularly, I doubt it's something most people will need to do."

"The video size is being touted as nearly DVD-quality. I can attest that on my 20-inch cinema display, it's not bad at all."


  • Usable interface

  • Consistent ordering process

  • Ability to start watching movie almost immediately after purchase

  • Portable on iPod and between computers


  • Can't burn a playable DVD

  • Aspect ratio doesn't adapt to screen size

  • Playback bugs on PC
"The price point on the movies is pretty high for a service that doesn't allow you to burn your own DVDs, but I think I realize why Apple set it at that level. Right now, the studios depend on revenues for DVD sales and rentals. The movie companies probably fear that putting the prices at rental or near-rental price would likely result in a net decrease of revenue. This fear is not unfounded, but it's also not insurmountable."

It's not hard to imagine how cool an ad-supported model would be for consumers and advertisers and content owners. Consumers get content they want at a discount, or for free. Advertisers can deliver messages to very appreciative consumers within highly engaging content. And content owners get even more distribution.

If you have thoughts about how this model can succeed, I'd love to hear from you.

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Pete Lerma Pete Lerma began his advertising career in the traditional side of the business, where he spent six years managing accounts for clients such as Coca-Cola and Subway. He then realized interactive marketing was where it's at and, in 1998, joined Click Here, The Richards Group's interactive marketing division. During his tenure at Click Here, he's forged relationships with major online publishers, networks and technology companies, and these relationships contribute to his perspective on the interactive marketing industry. As Click Here's principal, Pete oversees accounts for high profile brands including Atlantis, Hyundai, Travelocity, and Zales. His group has won numerous awards for their strategic and creative work, including recognition from the IAB, Ad:Tech, The One Club, Graphis, and Communication Arts. Pete serves on the board of directors for the Dallas/Fort Worth Interactive Marketing Association and also contributes to the marketing blog ChaosScenario.

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