Online video needs ads?

Apple changed history when it released the video-capable iPod and simultaneously added video content on-demand from ABC and Disney via its iTunes Music Store, sending advertising executives on a rampant search for marketing strategies to address new distribution models and monetize the content. Despite this, most media industry watchers believe a majority of the video services that will successfully lure cable subscribers, Web surfers and mobile device users will containing advertisements, not necessarily the paid-for distribution that iTunes currently offers. T.S. Kelly, analyst with researchers Media Contacts said that by experimenting with new ways to package Web-based video with advertisements and other types of content--such as social networking communities--those companies should be able to make as much money, and someday even more, than they have generated using traditional strategies, according to a report from eWeek.com.

"Consumers are changing habits for how they watch video, and people are consuming media in a more individualized way," Kelly said. "Development of new services can't be about individual programs from different providers; there has to be an aggregate opportunity to distribute content and advertisements across an almost limitless range of channels."

Ellen Comley, managing director of Media Planning Group--a marketing and advertising firm--said content providers and service delivery companies should not expect to easily move advertisement plans online because it remains unknown which new video formats consumers will truly embrace.

"As much promise as there is, the jury is out on what people want to interact with on the Web, broadcast TV has been very successful, and it's a gateway for marketers, but major hurdles to advertise successfully on the Web remain," said Comley. "It's still a major challenge just to figure out which shows to take online."

While Comley predicted that the Web video advertising market would gradually take off after the numerous companies involved could attract larger numbers of viewers willing to share more information about themselves with potential marketers, Apple has--so far--successfully circumvented this hurdle by proving that many internet users are already willing to pay for ad-free content.

by MacNN Staff