Has Rich Media Advertising come of age?

Following on my comments on the future of ITV and their multimedia future post Friends Reunited, I thought I might take a look at the state of rich media advertising and how it is developing.

On a recent assignment I was tasked to develop a revenue model that would support a free-to-air Internet TV service.  Most of the models in place utilised versions of Google’s Adsense, but I felt that the user would be unlikely to click on such ads and so I started to look at rich media advertising such as ad-rollers of various types such as this pre-roller ad for the Jaguar XF.

Future revenue will be as a result of a user driven addressable advertising model whereby income is derived from the advertising model powering the Internet today.  Rich media addressable advertising is a new class of advertising currently being deployed across the internet and it makes extensive use of video traditionally associated with the TV and Cinema advertising and extends the capability of the internet to enable users to interact with the advert offering numerous opportunities for advertisers to extend the contact with an interested party.

Rich media advertising provides addressable, accountable television advertising solutions that enable the delivery of targeted messages and engage viewers through interactivity. This advertising solution improves the overall effectiveness of advertising campaigns while providing true accountability through real-time reach measurement.

The New Advertising Model

Consider the advertising model from simple pre-roller advertisements which are shown whilst applications are loading and simple pay per click advertising for the purposes of building the revenue model.  Pricing for rich media vary, but ads such as a 20 second pre-roller ad is approximately £12.50 CPM. 

The IPA TouchPoints Survey in July 2008 indicated that the current consumer usage of broadband access is 34 hours per month in the UK per subscriber and according to a May 2008 Report from Forrester, typical online video viewing is achieving average levels of 4 hours per month per user.  Over a 4 hour period a Internet/TV viewer is forecast to view ten 20 second pre rollers.  For 100,000 users, this would equate to £50,000 in advertising income per week.  Pre-rollers are the cheapest form of video rich media ads available.  Longer 30s and 60s linear ads, mid-rollers and end rollers generate higher levels of CPM income.  In the US, Microsoft is experimenting with running 60s mid-roller ad breaks for every 15 minutes of video viewed.  High advertising rates are being generated by the likes of Navic Networks (recently acquired by Microsoft) who are providing a range of interactive TV ads powered by web capabilities enabling users to respond to ads and make requests and provide feedback on content.  Internet/TV advertising pricing is currently at a higher level than corresponding standard Internet advertising as it is being treated as an extension of TV advertising which is historically very expensive per viewer compared to the Internet.

Pay per click (PPC) advertising provided by Google has been tried with internet video applications such as RooTV.  These PPC ads currently attract and average click price of around 40p per click on Google and 29p per click on Yahoo!  Click through rate (CTR) is dependent on subject matter and targeting. However, I would suggest that for the purposes of modelling use a CTR of 2% which is equivalent to current run of site rates across PPC advertising and the lower Yahoo! rate of 29p per click.

Addressable Advertising solutions help advertisers to reach the full potential of television advertising and improve the overall effectiveness of campaigns. These solutions allow advertisers to target groups of viewers using overlays on 30-second, 60-second, targeted video, or long-form advertising using any or a combination of the following: Request for Information (RFI), Telescoping, Viewer Polls, or Targeted Information Overlays.

Request for Information (RFI) & Fulfilment

RFI overlays are targeted, interactive enhancements that invite viewers to elect to receive more information on a product or service. RFIs generate highly qualified leads and provide the most targeted and direct connection with digital cable viewers. Advertisers are able to send coupons, product samples or brochures to self-selected viewers.

Telescoping

Telescoping is also known as linking to long-form advertising and bridges both linear and on-demand advertising by connecting customers with enhanced product information and enabling direct ecommerce.  Interactive overlays allow viewers to link directly to long-form VOD content such as the Jag ad above.  Telescoping combines the reach of linear advertising with the one-on-one nature of interactive on-demand content.

Telescoping brings together targeted interactive overlays with 30-and 60-second roller ads pushing viewers into longer more in-depth information about the advertised product or service.  Telescoping to VOD solution addresses one of the biggest challenges facing advertisers today that of implementing VOD advertisements without having viewers’ access content through a complex click through process.  By clicking on an interactive prompt, viewers are linked directly to the long-form video advertising content without the risk of them losing interest while navigating menus.

Viewer Polling

Poll overlays are graphical, interactive enhancements that are designed to engage viewers while obtaining their interests and opinions through viewer self-segmentation. Viewers use their existing remote controls to respond to questions posed in the overlay. Poll results are recorded, compiled, and electronically communicated back to the advertiser and can then be used to define targets for subsequent advertising campaigns.

Targeted Impressions/Spot Tags

Targeted Impressions are non-interactive overlays that enable advertisers to update their spots with time-sensitive information, address or phone number of the nearest location, product/service specials, etc.  Using targeted impressions, advertisers can customise a single spot for different groups of targeted viewers.

Conclusion

Rich media advertising combines with Internet TV content now offers a powerful new advertising medium for traditional broadcasters to extract a whole range of new advertising revenues to support their transition away from declining broadcast advertising.  The increase in efficiency of TV based advertising for delivering relevant messages to targeted viewers has huge additional benefits and allows the broadcaster to target new advertisers who have not traditionally tried TV advertising due to the high cost and unaccountability.  Rich Media Advertising has clearly come of age and so will the major Broadcasters be able to move from the dying big budget ad spend to this form of accountable advertising?  Time will tell and probably very soon!