TV Commercials vs. Online Video Advertising: Battle of Conflicting Business Models

PART 9 Major Trends Impacting Media Agencies and Marketers 20102012One of the most obvious yet least apparent trends in the media and advertising world today is the untapped YouTube marketplace and the ability of marketers to both create and distribute online video advertising outside of traditional media and agency channels Among last week39s Top 10 Viral Video Ad Campaigns as reported by Visible Measures in Advertising Age half of the creators were either inhouse or undetermined Only two were produced by established major advertising agencies The Martin Agency for Geico BBH for Axe Three others were created by specialty agencies The Viral Factory for Samsung Buzzman for TippEx Mad Media for DC Shoes Marketers investing six figure budgets to produce 30quot commercials for television and simply exporting them online are missing or choosing to ignore the realities of online video advertising It is inherently a selfcontained marketplace with its own independent creative zeitgeist Using television commercials and highly polished and produced videos for paid prerollpostroll and integrated positions in traditional video content does not capitalize on the underexplored territory of online videoMarketers have discovered the value and importance of online video advertising which Jack Myers Media Business Report projects will increase an average of 68 annually to more than 45 billion in 2012 the fastest growing of any advertising sector And while several sales firms and ad networks are serving the thousands of sites that are integrating video inventory into their businesses the key driving force behind advertiser and agency adoption has been the opportunity to advertise in traditional network television programming via Hulu iTunes TVcom Yahoo and the networks39 own websitesOf the nearly 20 million monthly online video views according to comScore an estimated 80 are captured by YouTube leaving only the other 20 to be split among the TV networks39 own sites Hulu Yahoo aol Microsoft Vevo Babelgum Bliptv NextNewNetworks Revision3 and many others who are investing hundreds of millions in technology and content production costs to attract advertising and sponsorship support for their professionallyproduced video content In their efforts to be relevant many advertisers are turning away from traditional paid advertising models and launching video advertising campaigns designed to generate viral distribution via YouTube Facebook Twitter and other social mediaYou are receiving this email as a corporate subscriber to Jack Myers Media Business Report Redistribution in any form except among approved individuals within your company is prohibited As a subscriber you have full access to all archives and reports at wwwjackmyerscom If you require your ID and password contact maryannjackmyerscom Their challenge is a lack of developed creative and business models designed specifically to serve the social video model Media industry veteran Walter Sabo founder of Hitviews believes marketers must forge an quotauthentic credible relationshipquot with online video viewers and that quotproducts and messages must be within the context of entertaining videos that viewers seek out This is NOT viral marketingquot he stresses quotThe online video medium has created its own stars and celebrities many of whom have millions of followers who view every video their favorite stars release just as movie stars have fans who watch every movie they39re inquot Hitviews facilitates endorsement relationships between marketers and these indigenous online video stars who actually produce and distribute videos featuring the marketers39 products and services preapproved by the marketersSabo explains there are significant challenges to advertisers who attempt to export their traditional ways of developing ad campaigns to the online video market Since the webstars produce the videos and integrate the marketer39s product and message into their own unique video format and style the creative agencies lose their biggest profit centers amp8211 creative development and commercial production The webstars also control video distribution via YouTube and other sites so there are no traditional media costs While it39s an incredibly cost efficient advertising model says Sabo it does not fit neatly within any of the traditional profitcentric agency modelsAlso confronting the traditional business models is the growing trend to reduce the paid traditional media exposure for TV commercials and depend on viral distribution to increase reach and maintain frequency The 1 global viral video last week as reported by The Wall is the tenminute Ken Block video Gymkhana THREE produced for DC Shoes with additional funding from multiple sponsors At number three is the new Geico quotPiggyquot commercial which is poised to generate more views from unpaid online exposure than it will from Geico39s paid TV spots The Evian quotBabiesquot commercial has generated more than 80 million online views But for every Evian there are many advertisers who are quotpostingquot viral videos that fall embarrassingly flat While Isaiah Mustafa39s virally distributed Old Spice campaign captured creative lightening in a bottle it possibly did more for the actor39s career than it did for increasing sales of the men39s fragranceHitviews has signed and represents more than 50 online video quotwebstarsquot and counts one of them webstar Caitlin Hill TheHill88 as the company39s Chief Creative Officer Hitviews39 webstars have developed and distributed more than 100 videos for companies such as Virgin Mobile MTV Networks Microsoft CBS Panasonic ABC Family Logitech and The Weinstein Company Sabo claims their videos consistently generate more views often by millions than professionally produced online quotviralquot campaigns Sabo believes marketers and agencies will evolve their strategies to recognize the importance of tapping into onlineoriginated stars and their videos for celebrity endorsement and product placement

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TV Commercials vs. Online Video Advertising: Battle of Conflicting Business Models

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