iTunes announces advertising is on the way

Abbey Klaasen writes in Advertising Age that billboard advertising is about to appear in Apple's iTunes service. Is anyone surprised by this? I can think of few demographics more mouth-watering to an advertiser. Online, high disposable income, high speed internet, undeterred in using credit cards over the web (owns a credit card), active consumers of media, interested in trends... Agencies will fall over each other clambering for those spaces.

There is, however, some speculation that this is the first step in opening up podcasts to advertising.

Great! If this is done correctly then it could be a boon for end users and content suppliers. I have written elsewhere on this blog about the arrival of an Emmy category for cellphone or portable device content. At this moment this just means more back-patting for Lost and Desperate Housewives - one of these two programs is clearly going to win. But the introduction of advertising into this fledgling content medium is exactly the step it needs to see it grow into a whole new category of story telling.

In the coming months ABC is going to make several programs available to download for free. These programs will contain advertising that cannot be skipped. Even better news: NBC will roll out original 'webisodes' (how long before we get to drop the quote marks?) of The Office. This is not good news because I like the show -I don't. The US version is an appalling travesty compared to the original. It is good news because this is the new category of story telling I mentioned in the previous paragraph.

Now if only the major networks -or anyone else, for that matter- could combine these two strategies then we are in for exciting times. And I am not just talking about giving downloaders the option of paying for an ad-free episode or getting an ad-supported one at no charge -though that always remains an option.

Consider the narrative shape of a one-hour TV drama. How much backstory gets cut out? How much of the B plots and C plots don't make it into the final 44 minutes? This content -which is often shot during production anyway- is a perfectly saleable product that is currently only used for DVD extra features. I want to see this kind of content for the programs that I like. I seek it out.

Quoted in Ms Klaasen's article, J.P. Morgan analyst Spencer Wang estimates that the networks currently make $1.44 per iTunes episode sale compared with 57 cents in advertising revenue when that same episode is broadcast on television. That is good money but it once again misses the point. The argument should not be paid download versus ad-supported free download, there should be no argument at all.

By all means resell your broadcast content for a couple of bucks without the advertisements but I want to see original and unique content: ad- supported webisodes (I officially announce the dropping of the quote marks) made available as well.

There is no bad here. The webisodes function as teasers that drive iTunes sales and bring the audience back to the couch when the episode is broadcast -which in turn leads them to seek out the next webisode where they are exposed to more advertising.

And as a much needed side effect, it would hopefully allay the networks' hysterical shrieking over content piracy. Share the webisodes among your friends! It will only make them more effective.

Why In-Game Advertising Will Be So Successful

In his Mediaweek article on April 12, Mike Shields spoke to the CEO of Massive Inc, Mitch Davis, about In-game advertising. Mr Davis predicts that in-game ad spends could reach US $2 billion by 2010.

The majority of advertisers so far have been entertainment networks, film studios, fast-food brands and mens products such as Gillette. Placing advertising in games is seen as an ideal way to reach the crucial -and increasingly distracted- demographic of 18-34 year old males.

It is an absolutely brilliant idea and let me tell you why it will work. Gamers want so much for their experience to be real. MMORP games like World of Warcraft (difficult to advertise in, admittedly) occupy the minds of their users more than most people realise. There have been well-documented scare stories about how these games lead to obsession and mental health issues when things go wrong to a player's character in the game. Bah! They have been saying that about Dungeons and Dragons for several generations now. What these studies imply is how much of the gamer is 'living' inside his character.

I want companies such as Gillette to really start having a play with this. Roll-out a particular branded or coloured package that is only advertised in games. Make a Gillette product that only 'exists' in the game and see what I am talking about. Trust me, the desire to bring back pieces of whatever world the gamer is involved is barely controllable. Work with that. They will be eating out of your hands -and absolutely giddy about it to boot.

This is the tip of a very lucrative iceberg.

Emmy Awards for Cellphone Content

At the beginning of this month the National Academy of Television Arts and Sciences created and Emmy category for "outstanding original programming for computers, cellphones and other hand-held devices."

I find this hilarious on several levels -particularly the one where I imagine viewing sixty seconds of grainy cellphone content at a bus stop, putting my phone down and saying to myself: "That was outstanding."

Humour aside, this does mark a very interesting shift in the global mediascape. The recent success of making programs such as Lost and Desperate Housewives available for download for a small fee shows that the old media is wiseing up to web video. Online is the second fastest growing advertising category in the world (behind Hispanic media). Media execs have worked out that the audience is definitely there to stay.

Then let the experimenting begin! Considering it costs almost nothing to re-purpose video content for online delivery you will begin to see even more companies testing the waters of the alternate revenue streams -working out which ones will net them the most returns. In his article in USA Today on April 4th, Mr Maney had this to say:

So, really, it all adds up to a tipping point or strategic inflection point
or that moment when the coffee starts perking, if anybody can remember when
coffee actually perked. The established industry has come to feel safe
experimenting online. Ad sales have mushroomed. Technology has made
experimentation cheap and easy. And a sense of fear -of not wanting to get
Napstered all over again- has created a sense of urgency.

Great. So more and more content (and the advertising that comes with it) is starting to move to the web. Online video in the post-YouTube environment is set to become what mp3's were in the mid-nineties. A global phenomenon.

And where does this leave New Zealand? Let me just go out on a limb and say "well and truly behind." In my estimation we have a scant couple of months to force local loop unbundling if we even stand a chance of keeping up with the developed world. It takes time -and I am talking years- for the market to have any effect on Telecoms monopoly and it will take even longer before we will start to see the results of other companies such as Ihug and Telstra (fingers crossed) investing in our national broadband infrastructure.

If you think we have a brain drain now just wait and see what it looks like when people and companies find themselves incapable of doing business online because of our pitiful speeds.

Think about it. The rest of world has got to the point where they are developing award shows for a type of content that is not even on New Zealand's internet horizon.

Who wants to move back to Sydney with me?

Philips Develops Technology to force TV ad viewing

Writing for Business Week, May Wong -Technology writer for Associated Press- tells us that Philips is applying for a patent for a technology that can allow broadcasters to freeze a channel during commercials. This would make it impossible for the viewers to avoid it.

Company officials were quoted in the article as saying it was never their intention to force viewers to watch advertisements and the technology can be used to perform the opposite function -removing all the advertisements from a particular program.

Here is where this gets very interesting. You can see how the major companies are feeling their way into tomorrow's market. If we TiVo out all television ads, watch prime time programs whenever we feel like it and receive content on a multitide of different portable devices then their current business model is looking more than shakey.

Philips is obviously betting that in the next few years we will have the option to pay a premium and receive our programs free of advertisements or alternatively get forced into watching them. Be deeply suspicious of this technology as it leaves it up to the broadcaster whether they use the technology to cut out the ads or force them into your living room -and honestly, which one do you think they'll end up choosing?

The plus-side to this development is that we are one step closer to precision demographic advertising. Considering the sole purpose of this technology is to get advertisements to viewers in a climate where the notion of prime-time no longer exists, If I am going to be forced to view these advertisements in whichever VOD program I have had downloaded then they might as well target those advertisements specifically to me: young, male, iPod owner, living in New Zealand. It is simply a matter of capturing this information when I subscribe or download.

One of the problems for television in the coming days is that print has a wider array of technologies available right now to move from mass-marketing to niche-marketing, to make the jump from wide-appeal to the mixture of demographic and geographic marketing that will ultimately prove the most effective. This new technology from Philips will hopefully be a step in the right direction for TV, assuming they take my advice in the above paragraph.

Or at least it will be a step in the right direction if you don't own a Philips TV. The company has no plans to use the technology in any of its products. What did I say about being suspicious?