Internet TV's New Ad Medium Is an Old One: Live Sponsor Ads

  |  March 15, 2010   |  Comments

Independent video programs increasingly rely on live-read ad placements, which are effective and virtually effortless to produce.

In a development reminiscent of the early days of television, when the familiar hosts read sponsor messages on the air, many shows running on a range of Internet TV networks feature hosts that read live ads, and those ads are valued highly by both the video creators and advertisers.

Revision3, an Internet TV network, recently added a host to ROFL (Rolling On the Floor Laughing), a 15-minute weekly show that features comedy clips collected by Rooftop Media, a partner in the venture. Alex Koll, the San Francisco comedian who hosts the show, provides original comedy, introduces the other comics and reads live ads for GoDaddy.com and other sponsors between program segments.

"Instead of a pre-recorded ad he talks through it, which is a method that gives extra weight for advertisers," said Brad Murphy, Revision3's chief revenue officer. "The audience has an inherent trust with the host, who's a non-marketer who's part of the show. His voice is part of the content so if the segue is smooth, the talk about the product is less jarring and more readily taken in by the audience."

Gary Kamen, online marketing manager for GoDaddy.com, said the company uses pre-recorded and live ads on Revision3 and other sites. "Typically the live-read is the most effective for us, because new media hosts have a close relationship with their audience that includes a high degree of trust," he said.

Live host advertising is used on most of Revision3's 20 shows, with pre-roll and Flash overlays also available, Murphy said. But TWiT, another online streaming company with 20 podcasts on technology and science uses live read ads exclusively, according to Dane Golden, VP of programming. Many of the shows are hosted by Leo Laporte, a radio veteran and former host of TechTV. "Live radio ads were familiar to him, so that's how we started doing the live ads," said Golden.

Shows on TWiT range from 15 minutes to two hours, with live spots ranging from short billboards at the beginning of the shows to spots in the middle that can be as long as two minutes.

"Our model is to go with a smaller number of sponsors and do one per category," Golden said.

Squarespace, a Web hosting and blogging services provider, is another advertiser that's seen significant lift from live-read advertising.

Dane Atkinson, CEO of Squarespace, said live ads at TWiT, Revision3 and other Internet TV networks "are a big part of our success."

"They work because the Internet TV hosts are web celebrities and leaders of their categories who are willing to talk about products they believe in," he said.

The live ads deliver a 400 percent return on advertising investment, Atkinson said. ROI is measured by tracking promo codes for discounts that are stated by the hosts.

Another benefit of live ads is ease of production, since a spot doesn't have to be produced. "It works well from a production standpoint, it's easy on the resources," said Steve Woolf, producer of Epic Fu, the three-year-old Smashface Productions show that runs five minutes per week. "We create a short script and put it in the show."

TWiT doesn't even write the scripts, which are ad libbed by the host. "One of the first times we did it, the host said, 'What do you want me to say?' and we said, 'We want you to say what you think,'" Atkinson said.

Murphy said Revision3's live ads produce a 99 percent recall rate, and 48 percent of viewers have purchased sponsor products. ROFL has 40,000 to 50,000 viewers who watch it at Revsion3.com and a host of distribution partners, including Youtube, Blip.tv, Howcast and iTunes.

Live ads don't work on sites like Hulu that focus on full-length broadcast and cable TV shows with standard pre-recorded ads. Live ads are suited to small studio video content, which is a "slowly growing niche of online video," said David Hallerman, an eMarketer analyst. "It's easier to do, appeals to the advertiser and gives greater credibility. And the networks can charge more because it's a unique offering that can't be replicated by the other two content streams, broadcast and user generated."

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