Home  › Marketing › Strategies

The New Wild West, Part 1: VOD

  |  June 8, 2005   |  Comments

A new digital landscape is going through a Wild West period as buyers and sellers try to make sense of entirely new platforms. Part one of a series.

We've seen the rise of the Internet as a marketing vehicle. Many of us helped define the industry's standards and practices. We remember when the rules were being written and anything was possible. A new digital landscape, especially television, is going through the same Wild West period. Buyers and sellers are trying to make sense of an entirely new platform.

Two areas represent the greatest short- and mid-term marketing opportunities in digital TV: VOD (define) and enhanced TV (a.k.a., interactive TV), including "t-commerce" (commerce transacted via the television set). Neither area has established standards, policies, or practices, let alone a clue how to charge for the value they bring to marketers.

It's 1996 all over again.

VOD

VOD breaks down into two easily digestible chunks. The first is basically sponsoring existing VOD content supplied by a typical programming partner (Discovery, Scripps, CNN, etc.). The advertiser usually has the opportunity to run an introductory billboard, or a :15 or :30 spot prior to selected VOD content; a commercial within the content; and a commercial or long-form asset after the content. It's hardly the most innovative use of the medium.

The pricing model for this scenario makes some sense because it's basically another vessel for traditional TV spots. The only challenge is quantifying the number of people who had the opportunity to see the ads. Nielsen is working on addressing this issue with its Active/Passive (A/P) Meter, first installed in a sample Nielsen home in March 2005. The meter will allow Nielsen to better establish exactly what people are watching at any given time, including VOD and DVR content and console gaming.

The second VOD scenario is sexier for marketers: an entirely advertiser-owned "network" that lives either on its own physical channel (e.g., channel 754 is the L'Oréal channel) as with Time Warner Cable, or a few clicks within the free VOD content area of a cable multisystem operator (MSO), as with Comcast, Charter Communications, Cox Communications, and Cablevision. Marketers populate this network with a variety of assets. These could include five-seven minute (or shorter) branded films, or 20-30 minute programs of their choosing.

Here's where the pricing model gets particularly wild. Nobody has the vaguest idea how to price it in a way that makes sense. Some cable operators have tried pricing based on the amount of server space the VOD content occupies. This isn't a widely used formula. Server space will increase, and storage at the MSO will become cheaper and more plentiful (there's very little infrastructure cost difference between running a 20-minute channel and running a two-hour one).

Another short-lived pricing model was a charge per subscriber, regardless of viewership. It didn't make much sense. Still another charged advertisers a standard CPM (define) for "tune-in" spots that ran throughout the cable system, then server time was "free." Depending which market you're interested in, you can still negotiate this model.

Data and reporting standards are also still being worked out. The industry (along with help from the AAAA) has developed some minimum standards most MSOs adhere to. However some operators increase the number of data points they report as a kind of value add for the advertiser. We're not really sure as an industry what to do with all the data, and what they mean to our business, but more data must be better than less... right?

If you think standards exist across operators in report regularity and format, think again. That's why companies such as Atlas DMT and DoubleClick will be getting actively engaged in this area.

In part two, we'll look at the other side of the emerging television landscape, enhanced television, and the emergence of true t-commerce.

Until next time, ride 'em, cowboy!

ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, August 29 to take advantage of Super Saver Rates!

ABOUT THE AUTHOR

David Cohen Before joining Universal McCann Interactive, David Cohen was North America media director at Zentropy Partners. At UM Interactive, he plays a pivotal role in integrating interactive media into clients' overall marketing and media plans. David oversees all interactive media strategy, including planning, buying and analysis operations in the New York office. Current client responsibilities include: Wendy's International, Johnson & Johnson, Sony Electronics, Marriott International and Bacardi. David is active in many industry organizations and speaks frequently at seminars and lectures for the Advertising Club of New York and the American Association of Advertising Agencies (4A's).

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Marketing newsletter delivered to you. Subscribe today!

COMMENTS

UPCOMING EVENTS

Featured White Papers

BigDoor: The Marketers Guide to Customer Loyalty

The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

Jobs

    • Sales Planner
      Sales Planner (Verve ) - New YorkAbout Verve   Verve is the leader in location powered mobile advertising. We manage one of the largest mobile...
    • Systems Analyst/Support
      Systems Analyst/Support (Agora Inc. ) - BaltimoreIRIS (Increased Revenue Intuitive Software ) is proprietary software that helps marketers...
    • Client Services Support Specialist
      Client Services Support Specialist (Agora Inc. ) - Delray Beach OVERVIEW:  This position requires a highly motivated and resourceful individual...