Playboy Surfers Targeted for VW Polos in Web Video Ads
Bloomberg

Christian Baudis has profiled the perfect target for Volkswagen Polo online video advertisements in Germany: a man aged 25 to 39 who watches soccer matches, checks out the Playboy site and reads Der Spiegel magazine.

So the European head of New York-based Tremor Media Inc., an advertising network, knows which Web sites to market to the German carmaker’s ad agency.

“We go to them and say here are 150 sites with video content that is attractive to that target group,” said Baudis, who works with Volkswagen’s ad agency, Mediacom, a unit of WPP Plc, the world’s biggest advertising company. “Targeted advertising is more efficient. It costs less money to reach the target. That’s the beauty of it.”

Online video ads are the fastest-growing piece of the advertising industry, aided by their ability to show off products in a feature-rich medium and, increasingly, to zero in on a target audience. Volkswagen and HSBC Holdings Plc are among European companies using online video ads to reach potential customers as television audiences shrink.

In Europe, spending on online video ads could triple between 2009 and 2013 to about 1 billion euros ($1.4 billion), said Nate Elliott, an analyst in London for Cambridge, Massachusetts-based Forrester Research Inc. In the U.S., the online video ad market could grow to $3.01 billion in 2014 from $879 million in 2009, according to Forrester. Such ads currently account for just 1.6 percent of what’s spent on TV commercials, says New York-based research firm eMarketer Inc.

Still Young

HSBC’s two video ads on Web sites including those of the British Broadcasting Corp. and National Geographic, were among the bank’s “best-performing campaigns we ran last year,” said Ceren Dogany, digital account director at Mindshare Worldwide, a WPP unit. “We received a massive number of clicks and a really high click-through rate.”

Targeted advertising is in its infancy, Baudis said. Information on consumer preferences is drawn through “cookies,” or a small piece of text stored on a user’s computer by a Web browser. Ad agencies can then post ads based on consumers’ browsing habits. The system relies on consumers accepting the cookies and may be capped by privacy concerns.

“Consumers do appreciate targeted advertising, although it will take some time to develop, to convince them because of privacy issues,” he said. “Normally, targeted advertising will mean that you get better ads.”

The ads are inserted in a video program on a Web site or occupy space on an Internet page. Program developers in Europe are scrambling to capture this new revenue.

‘Huge Opportunity’

“Welt der Wunder,” a German producer of science, technology and educational shows that gets no ad revenue for programs aired on TV, sought the aid of Tremor, which pools several Web sites to make it worthwhile for advertisers.

“I liked the idea right away,” said Hendrik Hey, a producer for “Welt der Wunder.” “As a production company it’s hard to set up your own marketing division.”

Tremor, which aggregates Web sites for advertisers and provides them technology to place their ads, is among new players spawned by the online video ad trend. It is banking on Europe following a trajectory similar to the U.S.

At about 25 million euros, online video ad spending in Germany is miniscule compared with the 3.9 billion euros spent on TV ads, said Baudis. Online video advertising in Germany alone could grow six-fold by the end of 2012, he said.

SAP Ventures, an investment arm of SAP AG, the world’s largest maker of software for businesses, last year invested an undisclosed amount in Tremor.

‘Ubiquitous’

“We felt that growth in online video advertising would be one of the strongest online advertising sub-segments,” said David Hartwig, a SAP Ventures partner in Palo Alto, California. “Online video is going to start encroaching on some traditional TV viewing and it’s going to start to pull from TV advertising, making it a really huge opportunity.”

Other companies capitalizing on the trend include Cambridge, Massachusetts-based Brightcove Inc., with a platform that publishers use to manage video content. Its investors include General Electric Co. and Hearst Corp., and it manages video content on the Web sites of The New York Times, Conde Nast Publications and Universal Music Group.

“Video will become as ubiquitous and pervasive as text on the Web, and if you’re an organization, a corporation, a media company, you’re going to make video a much more central part of how you market, communicate, educate and entertain,” said Jeremy Allaire, its founder and chief executive officer.

TV Decline

Most online videos, into which ads can be inserted, are between three and five minutes long. Microsoft Corp. recently established MSNmovies in Germany with 200 movies into which it inserts ads in every chapter.

“It’s on demand, for free and a continuous experience to the consumer, like on TV,” said Marc Adam, marketing director of Microsoft’s MSN.com.

MSN.de in Germany sold all movie ad space for months to come and may now put in two or more ads per chapter, he said.

Tremor’s Baudis said advertisers don’t understand the technology and still place the bulk of their marketing dollars in TV. That may change as companies including Ford Motor Co., Mars Inc., and Citibank Inc. earmark a portion of their ad budgets for online media.

TV is already feeling the pain. According to Forrester, 2009 was “the worst advertising year since 2001” for broadcasters. Reasons it cites include a shift to online advertising, a shrinking audience share during prime time and increased competition from digital media among younger viewers.

Higher Engagement

“A lot of big brand advertisers are taking us as if we were a TV station,” Baudis said. Tremor has more than 3,500 Web sites globally where it can stream ads.

Advertisers online know exactly how many viewers they’ve reached, unlike with TV, said Brightcove’s Allaire.

On TV, it’s a “brand impression,” he said. “On the Internet, a video ad comes up and it’s designed as a call to action for the user and they can click it, taking them to the marketing Web site.”

Advertisers can target age groups and gender by analyzing browsing habits.

“If Tremor has a client, a big pharma company like Bayer or Novartis, they will come to us and ask what programs we have on health or medicine that can be put on our Web site, with the ad from the company running with it,” Welt der Wunder’s Hey said.

On TV and in newspapers, such targeting is harder.

“The more it’s targeted, the more advertising becomes information, and the more it becomes information, the higher the engagement and interest in the ad,” Microsoft’s Adam said. “That’s what can happen online.”

March Madness Sells Out Online


ADOTAS — The chance to get advertising in front of college basketball fanatics online has pulled in millions for CBS.

The network is nearly sold out of inventory and is approaching $30 million in ad revenue for its web video that allows fans to live stream the 60-plus tournament games it televises, with about two weeks to go before the start of the NCAA men’s basketball tournament. The revenue will definitely see an increase “well north of 20 percent more” than last year’s record $23 million, according to Mediaweek.

The quality of the inventory and size of the audience has combined with great search engine placement to make it an easy web buy for advertisers. AT&T, Coke and Pontiac are sponsors. A record 4.7 million unique viewers live streamed the games last year. CBS does not anticipate extended wait periods for users looking to access live games because of heavy demand this year.

For the at-work-slackers, there will be “boss button” - which enables viewers to display a fake spreadsheet on their screens with a click of the mouse.

Online Advertising to Surpass Television as Number One Advertising Medium.

New Advertising and Media Forecasts predict that within five years online advertising will surpass the television industry as the largest and most popular advertising medium.

As the six major TV networks align their fall programming lineups and begin making their upfront sales pitches, the reception from large agencies has been frigid.

Insiders report that Internet is making a stronger impact and influence with buyers who plan on shifting more budget into online mediums away from Television, radio, print, billboards, and direct mail. Advertising allocations are being shifted to the Internet as marketers are requiring more immediate and personal contact with their target market. The web is becoming a more attractive advertising delivery system.

Internet advertising is projected to grow to 20% of all ad spending by 2010 as more marketing money is moving to the Web. Network TV advertising is considered less powerful as cable fragmentation, high-def programming, TiVo and media on demand vehicles are eroding television's viewing audience.

In short, TV is not being watched by as many consumers as in years past.
The couch potato is quickly being replaced by the web surfer.

The major search engines led by Google are launching Really Simple Syndication (RSS) feed vehicles that allow advertisers to display ads in appropriate content and feed vehicles, this is eliminating waste and increasing impact as advertising messages can be more aligned and targeted with in-market media programming.

Web advertising is the most relevant advertising medium.

Organic/Natural Search Engine Optimization the most effective and powerful foundational element within successful web advertising efforts.

Key Organic Search Engine Optimization Facts:

• Keyword search is the 2nd most popular online activity, rapidly approaching the popularity of email retrieval.
• 
  90% of all new website visitors are delivered by a major search engine and/or directory.
  
• 98% of all keyword search activity results are powered by the big 4 search engines: Google, Yahoo, MSN and AOL.
  
• Keyword search results on Google, Yahoo, MSN and AOL are all determined by a search engine spider and/or robot crawler.
  
• Recent internet marketing studies confirm that keyword searchers prefer the organic results at a 6 to 1 ratio vs. pay-per-click sponsored search advertising listings.

Also online advertising medium continues to evolve and grow. The next logical extension for online advertising is growth for advertisers within the blogging industry as blogs allow advertisers to tie their advertising messages into topic-centric blogs that are more content relevant than the often; bland, dated, and waste-filled programming and content of: TV, print, radio, etc.

Advertisiers also realize that media consumption is changing daily and broadcast mediums are not as popular or as effective in reaching huge pockets of consumers as they once were and the costs associated (cost per ratings point) have increased dramatically in recent years. These same television campaigns that are losing impact and reach with consumers are now more expensive as TV rates continue to rise.

Editor's Aside:

It is especially painful to watch the domestic automakers continue to pour millions into TV advertising campaigns as they lose billions per quarter. Here in Metro Detroit as thousands of our colleagues, relatives, neighbors, and friends lose their auto jobs, retirement benefits, pensions, healthcare coverage or all of the above, its becomes quite the bitter pill too swallow when the big three automakers continue to pour hundreds of millions of fresh dollars into redundant television advertising campaigns that are not driving product sales.

Can the executive teams at the big three ever seriously adjust to advertising market conditions? Do they truly understand that television viewing levels and newspaper readership levels are declining? Television is not having the impact it once did with prospective car and truck buyers. The vehicle buying public is no longer watching or responding to the redundant television advertising campaigns executed by the big three.

Once again the car makers are actively negotiating their upfront television buys seeking to pour billions more into the televsioins medium throughout this decade. Quite ironic to consider that the same executive decision making teams that have handed sales market share to foreign automakers and responsible for their corporate turnaround plans are the very same groups signing off on TV heavy ad campaigns.

The latest reports show that the automotive manufacturers continue to lead the charge into TV spending the most on the television medium. This is simply another indication that the executive teams at the big three are stuck in the past. The domestic automakers need to reeducate and adjust their marketing efforts rapidly and embrace the new global paradigm sooner rather than later.