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Streams of Thought: Too Much of a Good Thing?

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I had a discussion recently with another Streaming Media writer about the state of online video advertising and tried to figure out why we seem to be seeing the same streaming advertisements day in and day out.

I agreed with his assessment that online advertisements suffer from their sameness to traditional television ads, which are designed to engage a different audience altogether. Plus the poor quality of online-advertisement encoding, relative to the much higher-quality encoding seen on TV, visually calls into stark contrast the difference between the quality of the programming and the quality of the advertisement.

As another take on that discussion, though, I suggest that we are also seeing a classic early imbalance on the supply-demand continuum. However, this is not a supply-demand mismatch between consumers and content owners, but an imbalance between advertisers and content distributors.

Imagine an advantage matrix (the Boston Consulting Group model popularized in business school) that shows four quadrants: Along the left side are consumers and content owners, while advertisers and content distribution are on the right. If consumers are in the lower-left quadrant and advertisers in the upper right, we’re looking for a continuum that provides enough consumers to pass into the upper quadrant. In essence, we’re looking for a critical mass that can attract advertisers to put their money into ads that actually engage the audience.

What appears to have happened recently is an "imperfect storm" in which the critical mass of online video viewership has risen across almost all internet user demographics, but the number of advertisers reacting to this market shift has yet to emerge. The reasons vary from the economic downturn to a failure to differentiate between banner ads and video ads and even to the quality of the ads, as Daily posits. The results are the same, however; the same content gets played over and over and, given the audience and quality mismatches, moves from familiarity to contempt fairly quickly.

As another way of examining this, let’s spin the model around to compare content against advertisements, asking the question, "How much content is too much?"

Scarcity sometimes leads to better advertising retention, according to a recent study conducted by McPheters & Co. at the MGM Grand in Las Vegas. Using CBS Vision’s Television City facilities at the hotel, McPheters looked at the effectiveness of advertisements across various mediums.

"Though TV doesn’t deliver as many ads per half hour as do magazines, net recall of TV ads was almost twice that of magazine ads," a press release from McPheters & Co. states, adding that "magazines in turn had ad recall almost three times that of Internet banner ads."

It’s worth pointing out that McPheters "specializes in strategic planning and research for brands and for companies in media-related fields, including media owners, advertisers, and ad agencies." Yet even though this study was designed to show the effectiveness of television ads, a small snippet within the findings was of interest to those in the streaming space.

"Internet video ads appeared much less frequently than banner ads," McPheters states. "When they did appear they were twice as likely to be seen as banner ads."

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