Pre-Roll: Too Few Advertisers, Too Many Videos

by Les Luchter, Friday, Jun 15, 2007 6:00 AM ET
WHILE MORE CONTEXTUALLY TARGETED FORMS of online video
advertising--including tickers, in-screen and bumpers--wait for their
turn to shine, the already "traditional" online format of pre-roll is
suffering from too few advertisers buying up lots and lots of
inventory.

That was the message conveyed by Ari Paparo, vice president of rich
media at DoubleClick, who spoke on the Promax's "Future of Online
Advertising" panel yesterday. "Only 20 advertisers are doing
in-stream," Paparo said--and, ironically for an ad format that closely
mimics traditional TV spots, they're the CPG companies, auto and
finance companies that are "running away from television...They're
buying whatever inventory they can."

Paparo was responding to a question by panel moderator Will Richmond,
the president and founder of Broadband Directions, who wondered why,
although he receives other Internet ads targeted directly to him, he
keeps seeing pre-rolls for tampons.

Eric Druckenmiller, media director for digital agency Deep Focus,
added that "a lot of in-stream advertising is being bought by larger
CPGs without much thought if they're reaching the right audience."

Fred McIntyre, senior vice president of AOL Video, noted just how many
videos are now on the Internet compared to when AOL started to run
pre-rolls just two-and-a-half years ago--in 2006, 2 million videos,
now 20 million, and by the end of the year, an estimated 50 millions.
McIntyre added that AOL's video search engine, which is free to all
takers, now has 40 million unique users.

Paparo pointed out the difficulty of buying video properties that may
be available through five or six portals: "If I want to reach the
'Lost' audience, I may need to make six different deals, with six
different creatives."

A similar media buying dilemma on a much larger scale was expressed
earlier in the day on another Promax panel by Aaron Cohen, executive
vice president of Horizon Media, who said that his agency had seen
presentations from 94 cable networks, five broadcast networks and
seven syndication companies-not to mention print and radio
companies--each of which had a "wheel" offering myriad opportunities
across multiple platforms.

What do we do with 100-plus wheels?" Cohen asked, pointing out the
complexities of both buying and measuring. In order to cope with media
companies that are offering multiplatform opportunities, he said,
media companies need to implement "total integration of online people
with traditional media buyers....From our perspective, we need a
wheel."

NBC Universal sees Web video JV launch in Sept.

NEW YORK, June 14 (Reuters) - Media conglomerate NBC Universal said on
Thursday it expects a new online video venture it is building with
News Corp.(NWSa.N: Quote, Profile, Research) to launch in September.

The two companies announced the venture in March, saying at that time
it would begin operation in the summer of 2007.

The yet-to-be-named Web video outlet aims to compete for viewers with
Google Inc.'s(GOOG.O: Quote, Profile, Research) popular YouTube video
sharing site and other online video outlets under construction by
large media companies.

Ads growing with broadband speed

Ads growing with broadband speed
Bigger files draw more viewers; video spots likely to top $1 bil
By Paul Bond

June 13, 2007
Part One: Web video attracting broad band

If you need evidence for the recent boom in online video streaming,
take a look at Akamai Inc., a company that delivers as much as 20% of
the Web's traffic each day.

At its Web site, visitors can see a snapshot of what's happening on
the Internet each day. One day last week, for example, 728,892 people
were downloading music files every minute worldwide. At one real-time
moment last week, 671,280 people were enjoying rich media, much of it
video, simultaneously. And those numbers don't include files that
Akamai isn't involved in delivering.

The explosive video growth trend is clear during recent months. In
November, Akamai recorded peak moments of rich media streamers at a
rate of about 565,956 per minute, while last month it grew to 974,296
each minute during peak times.

The two major trends in broadband video, according to Tim Napoleon, a
product line director at Akamai, are bigger files and more people
watching them. As for the former, file sizes used to be about 300 kbps
and would typically fill a quarter of a computer screen with video.
Nowadays the more usual is full-screen video at 700 kbps.

"Four years ago it was a challenge at studios to do something as
simple as a movie trailer online," Napoleon said. "Now you can see a
full-length episode of 'Heroes.' "

And better online video is coming quickly. While Leichtman Research
Group said 70% of all U.S. Internet users surf via broadband
connections, these broadband connections aren't nearly as fast as they
could be. Japan, for example, enjoys Internet connection speeds many
times faster than those used by Americans.

Plus, regarding video on the Internet, Napoleon said the great news is
that "there's a business model in place with ad servers. That wasn't
true a few years ago."

Online advertising, according to the Interactive Advertising Bureau,
grew 26%, to $4.9 billion, in the first quarter compared with the same
frame last year. By some estimates, online video advertising -- now
proving its worth -- will account for $1 billion next year and explode
from there.

Media analyst Mike McGuire of Gartner Inc. said Apple Inc.'s Apple TV
and TiVo Inc. are correctly taking a measured approach to moving
broadband content to TV screens. "It's as much research as anything
else," he said. "They're being smart to get it out there and gauge the
response."

According to a report from Wall Street firm Bear Stearns, 33% of
Internet users would prefer to watch online video content on their TV
sets, while 21% said they don't like watching videos on their computer
screens at all.

While no one denies the popularity of online video, important
questions remain: How will it benefit, or hurt, major entertainment
companies? Which revenue models are likely to succeed? And is
user-generated content simply a fad? Bear Stearns addressed each of
these issues in its report.

User-generated content is here to stay, Bear Stearns argues. The firm
said that user-generated content, both the video and text variety,
made up no more than 1% of the content on the Internet in 2004, but
now makes up at least 13%.

But more content also could lead to frustration as consumers fumble
through disappointing videos.

Therefore, Bear Stearns concludes: "In an era of theoretically
infinite video choice, the greatest value can be created not by
producing content but by solving the paradox of choice and connecting
users' individual interests with the vast supply of content."

That's exactly what Steven Spielberg, Ron Howard and their partners
were thinking when they founded the ill-fated Pop.com. But it's only
one reason why video repositories like YouTube and others are so
popular, the other being the quirky user-generated content itself.

According to Bear Stearns, 77% of Internet users call repository sites
of all kinds of video their preferred method for seeking video
content. That's tied for best with links that are forwarded by
friends. And it's better than the 57% who said a search engine is
their preferred method or the 54% who prefer such a major media outlet
as MTV.com or ABC.com.

As for that pesky problem of monetizing online video, Bear Stearns
said that, while paying a la carte or via subscription for content
isn't appealing to consumers, they don't mind 15-second commercials
tacked on to each video, especially if the ads are for something
interesting to them.

On the downside, Bear Stearns sees possible trouble for media
conglomerates because of the migration to online video. Excluding Time
Warner because of its AOL unit, big media companies get only about 2%
of their revenue from digital initiatives, the firm calculates.

"Even assuming 20%-plus annual growth in this revenue stream over the
next five years, this figure would rise to only about 7% of total
sales," according to the report. "The risk is that core revenues
decelerate faster, which is what has happened with newspaper
companies."

KPMG Corporate Finance’s Valuation Update for the Advertising and Marketing Services Industry

Microsoft Corp. (NasdaqNM:MSFT) acquired aQuantive, Inc.,
(NasdaqNM:AQNT) for US$66.50 per share in an all-cash transaction
valued at approximately US$6 billion. aQuantive, Inc., is a global
digital marketing company and is the parent company of Avenue A |
Razorfish, the largest interactive agency in the U.S.; Atlas, a
provider of integrated digital marketing technologies and expertise;
and DRIVEpm, MediaBrokers and Franchise Gator, performance media and
behavioral targeting businesses. The transaction price represents a
premium of approximately 93 percent over aQunitve's prior day's
closing share price. The purchase price implies a revenue multiple of
12.9x and an EBITDA multiple of 56.2x. (May 18, 2007)
WPP Group plc (LSE:WPP) acquired 24/7 Real Media, Inc.,
(NasdaqNM:TFSM) for US$11.75 per share in an all-cash transaction
valued at approximately US$649 million. 24/7 Real Media, Inc. is a
leading global digital marketing company, empowering advertisers and
publishers to engage their target audiences with greater precision,
transparency and return on investment. The offer price represents a
premium of 30 percent over the average closing price of 24/7 Real
Media's shares for the last sixty trading days. The purchase price
implies a revenue multiple of 3.0x and an EBITDA multiple of 103.0x.
(May 17, 2007)
Alliance Data Systems Corporation (NYSE:ADS), a leading provider of
loyalty and marketing solutions derived from transaction-rich data,
has agreed to be acquired by Blackstone Capital Partners V L.P., in a
transaction valued at approximately US$7.8 billion. The purchase price
represents a premium of approximately 30 percent over Alliance Data's
closing share price of US$62.96 on May 16, 2007. The transaction
value implies a revenue multiple of 3.2x and an EBITDA multiple of
13.6x. (May 17, 2007)
Acxiom(r) Corporation (NasdaqNM:ACXM) a provider of customer and
information management solutions, has agreed to be acquired by Silver
Lake and ValueAct Capital, in an all-cash transaction valued at US$3.0
billion. Under the terms of the agreement, Acxiom stockholders will
receive US$27.10 in cash for each outstanding share of stock. This
represents a premium of approximately 14 percent over the closing
share price on May 16, 2007, the last trading day before the intended
transaction was disclosed. The purchase price implies a revenue
multiple of 2.1x and an EBITDA multiple of 7.5x. (May 17, 2007)

For Video Search, Ask.com Doesn't 'Tube; It Blinkx...

Ask.com has partnered with Blinkx to power its video search results,
reports Mashable (via CNN).

Revenue will be split for each sponsored result users click on, as
well as for advertising revenue generated when users go to media
partner sites.

Blinkx has already partnered with search engines MSN and AOL. Other
web partnerships include Sproose, National Geographic, ChaCha,
Quintura and LookSmart.

Blinkx has already gone ahead with its IPO, demonstrating it is ready
to grow the business and become a major competitor to other video
search engines - namely Google's YouTube.

Joost Unveils Ad Targeting Scheme

As it builds still more content providers for its Internet television
platform, Joost is also giving thought to how it plans to deliver
targeted and relevant ads to its viewers, reports The New York Times.

Joost is experimenting with a number of ad formats to extract the best
fit for both advertisers and viewers.

In addition to in-stream 15- and 30-second spots, the company is
serving ads in "bug" format. Bugs are brands that appear as floaters
in the corner of the viewing screen. These typically appear shortly
after an ad for the floating brand has just aired.

Clicking on the bug opens a new browser window that takes viewers to
the product.

The goal at Joost is to find an advertising format that does not
depend on the TV ad model, but is also careful not to dismiss it out
of hand. Ads will largely be targeted to viewers based on personal and
demographic data that users entered when they first registered with
Joost.

Online views

Online video users tend to watch clips fairly frequently, with the
vast majority viewing Web videos at least once a month, according to a
new report by the Online Publishers Association.

Forty-four percent of 1,422 U.S. online video users surveyed by the
OPA reported that they watch clips at least weekly while 73% do so at
least once a month.

What do they watch? News and humor are among the most popular content,
with 14% of online video users reporting that they view news clips
daily, while 45% say they view such at least weekly. Nine percent say
they watch humor videos daily, while 39% watch comic clips at least
once a week.

But even Web video fans haven't yet turned to mobile video. Just one
in five online video watchers (18%) say they watch clips on mobile
devices or MP3s, according to the report. That small group tends to do
so regularly, with 41% reporting viewing mobile video at least once a
week.

Also, the OPA study is bullish on video ads. Eighty percent of
respondents said they had seen video ads, and the majority (52%) of
that group said they took some action, such as visiting a company Web
site (31% of those who took action after viewing an ad), going to a
store to learn more about a product (15%) or making a purchase (12%).

These figures are comparable to those of The Kelsey Group, which also
recently examined online video ads. Like the OPA, Kelsey found that a
slight majority (around 55%) of those who viewed video ads took some
action, such as visiting a Web site (43%), a store (18%), or making a
purchase (15%).

Post your response to the public Online Minute blog.

Fox/NBCU Add 'Fuel' to New Web Venture

Mike Shields

MAY 30, 2007 -

News Corporation and NBC Universal continue to expand the programming
roster for their upcoming joint Web video venture. The companies
announced five new content partners on Wednesday, including the
auto-enthusiast-aimed Fuel TV and Speed, as well as Oxygen, Sundance
Channel and TV Guide Broadband.

Each new partner will distribute a selection of short- and long-form
video content both on the soon-to-launch video hub, which is meant to
serve as the networks' answer to YouTube. In addition, these networks'
clips will be syndicated across the joint venture's network of
affiliate sites, which will include AOL, MSN, Yahoo, MySpace and CNET.

Among the shows that will be made available to millions of Web users
are Oxygen's The Bad Girls Club, Sundance's The Green and Big Ideas
for a Small Planet and TV Guide Network's America's Next Producer,
along with its various interview shows from major Hollywood awards
presentations.

Previously, News Corp. and NBC Universal had written similar content
deals with AOL, MSN, MySpace, Yahoo, CNET and Comcast's cable
networks: E!, Style, G4, Versus and the Golf Channel.

Charter advertisers that have committed to the service include Cadbury
Schweppes, Cisco, Esurance, Intel and General Motors.

In addition to its third-party content providers, News Corp. and NBC
Uni will seed the new site with programming from their own broadcast
and cable networks, including popular prime-time fare like Fox's 24
and NBC's The Office.

The two networks said that the new stand-alone video site, along with
the corresponding network, will go live sometime in late summer. The
new venture will have offices in New York and Los Angeles. A name and
a permanent management team is expected to be unveiled shortly.

--additional reporting by Anthony Crupi

Two Companies Patent Ad Technology for Online Video

Two Companies Patent Ad Technology for Online Video

Content type plays stronger
role in ad technology

Get Interactive and Adjustables have just patented separate
technologies in getting ads embedded into online video, reports
MediaPost.

Get Interactive has created a button that parks alongside a video and
takes users to specific scenes, where "Get Shop" icons provide more
info on specific products.

In testing, 70 percent of users rolled over for more info and 12
percent clicked-through to the product's retail site. The company is
talking with mobile providers, which would allow users to buy items on
mobile video and have charges sent to their mobile bill.

Meanwhile San Franscico-based Adjustables developed a technology that
shows logos, banners, picture-in-picture, or text, based on a user's
specific interests or what media they're using to access content.

Google Seeks Volunteers for Ad Collabo Tool

Google recently launched its Ad Creation Marketplace, a place that
connects advertisers with video creators, reports Search Engine
Journal.

The marketplace is accessible through the AdWords interface.
Advertisers can set a budget and list services needed, then find
third-party vendors who can create the ad. Google is seeking
volunteers to test the system.

The Ad Creation Marketplace is meant to remove barriers to entry for
companies who want to video ads but lack the resources to do it
themselves.

Joost Boost Worth $45 Million

Joost Boost Worth $45 Million
by Gavin O'Malley, Friday, May 11, 2007 6:00 AM ET
WEB TV STARTUP JOOST HAS received another vote of confidence in the
form of $45 million in investment from five prominent media and
venture capital companies.

They include CBS Corp. and Viacom Inc., Silicon Valley venture capital
firm Sequoia Capital, Europe's Index Ventures and the Li Ka Shing
Foundation, founded by the chairman of Asian conglomerate Hutchison
Whampoa Ltd.

Joost's new investors are not saying how large their stakes are, or
how much they paid for them.

Joost, founded by the same entrepreneurs--Niklas Zennstrom and Janus
Friis--who brought the world Skype and Kazaa, last week announced a
lineup of 32 major brand advertisers to support its content.

Aided by a year-long partnership with Interpublic Group's Emerging
Media Lab, brand advertisers include Microsoft, Intel, Motorola, and
Sony Electronics. Separate deals have been made with Hewlett-Packard,
Coca-Cola, Procter & Gamble and Nike.

Unlike video-sharing sites like YouTube, which are dominated by short
clips, Joost's mission is to popularize long-form, high-quality,
ad-supported content.

The startup has clearly convinced major media companies that it will
deliver on these promises.

"We've carefully selected these investors from a variety of interested
parties," said Friis. They "bring unique assets to Joost that will
enable us to significantly accelerate growth and development of the
Company."

Joost "allows content owners to reach audiences of any size at any
time," said Roelof Botha, a partner at Sequoia.

The company made headlines recently when it signed Viacom as a content
partner, shortly after the media titan filed suit against Google for
alleged copyright infringement by YouTube.

Since then, Joost has signed a number of additional content partners,
including Warner Music, National Geographic, Turner Broadcasting, The
Cartoon Network's Adult Swim and CNN--along with programming from
Hasbro, the NHL, Sports Illustrated and Sony Pictures Television.

Vmix/DirecTV Partner to Put Web Videos on TV

Video site Vmix has signed a deal with DirecTV that will enable them
to put selected web videos on TV, reports Red Herring.

Users can submit videos to a section of the Vmix website, where they
will be considered for use on DirecTV's show The Fizz. This is an
effort by DirecTV to move beyond the established user-submission
community. It's also an opportunity for Vmix to position itself as a
powerful distribution outlet in the media world.

DirecTV currently pays select creators up to $200 for submissions but
it is not clear whether Vmix content creators will be eligible for the
same compensation.

Google Furthers TV Push With Dish Deal

Google Furthers TV Push With Dish Deal
EchoStar Brand to Run Ads in Auctioned Spots, Provide Viewing Data

By KEVIN J. DELANEY
April 3, 2007; Page B4

Google Inc. is furthering its ambitions to move beyond online
advertising with a multiyear contract to sell television commercials
that will appear through satellite-TV provider EchoStar Communications
Corp.

Under an arrangement to be announced today, Google will sell TV ad
spots through an online auction system, with advertisers bidding the
amount they are willing to pay per thousand households that view each
commercial. Google will send the commercials of the winning bidders to
EchoStar, which will then insert them in an unspecified number of
daily blocks in the TV programming it delivers to the roughly 13
million households that subscribe to its Dish service.

The deal expands Google's push into the $54 billion U.S. market for TV
advertising, amid similar efforts by the Internet company to move into
radio and newspaper advertising. The EchoStar agreement builds on an
existing Google test of serving up TV ads to Concord, Calif.,
subscribers of cable provider Astound Broadband, a unit of
WaveDivision Holdings LLC.

The EchoStar partnership provides national distribution for TV
commercials brokered by Google, and the Mountain View, Calif.,
Internet company says it intends to sign similar deals with cable
providers, TV channels and local broadcast stations to sell ads for
them.

TV networks and some advertisers and media buyers have in the past
proved reluctant to join Internet-based efforts to change how TV ads
are sold, at least partly out of concern that their business would
become commoditized. But advertising executives briefed by Google on
its plans welcomed the announcement, saying it could improve the
market for cable and satellite-TV ads and nonpremium ad purchases.
Some added, however, that Google's auction system wouldn't replace the
way the premium spots, such as those for prime-time broadcast
television, are sold.

"I don't think anybody is thinking this is going to change large
national broadcast," says David Kenny, chief executive of Publicis
Groupe's Digitas digital unit. "This is something that brings a lot of
value to the more fragmented end of television."

Google and EchoStar declined to discuss financial details of their
arrangement, which they are testing and expect to have fully launched
within the next few months. But Google typically provides a minimum
revenue guarantee to partners, lessening the partners' financial risk,
and keeps a commission on ad sales.

Mike Kelly, EchoStar's executive vice president of advertising, said
Google would account for only a small percentage of the ads EchoStar
has to sell.

Advertisers who use Google's Web-based system for buying commercial
spots have the option of selecting specific TV networks, times of day
and regions where the ads will be viewed. Eventually Google intends to
allow advertisers to target specific groups of viewers, based on
information about the viewer demographics for each channel.

Google plans to tell advertisers how many TV set-top boxes were tuned
in to each commercial they ran, and charge based only on the number of
set-top boxes where the commercial played. It additionally will
provide advertisers data about whether users changed the channel
during the commercial.

Google is relying on information collected from set-top boxes by
operators such as EchoStar, which it says does not permit it to
identify any specific subscribers. At least initially, Google is not
matching commercials with the content of TV programs or showing ads to
specific users based on previous viewing habits or other personal
information. The Internet company says concern for user privacy will
be a factor in any future efforts to target TV advertising more
specifically.

For EchoStar, of Englewood, Colo., the deal could potentially boost ad
revenue if Google's auction system generates more demand for
commercial spots. EchoStar satellite TV subscribers won't see anything
different under the arrangement, as the commercials brokered by Google
will fill normal ad spots.

Similar efforts are under way elsewhere. Online auctioneer eBay Inc.,
with a group of large advertisers, is setting up an Internet-based
system for buying and selling TV ads. Closely held Spot Runner Inc.
has built an online system for advertisers to buy TV spots, and caters
to small- and medium-size advertisers who might not have bought TV
commercials before.

"It's way too early to tell whether Google will ultimately be able to
find the same success in traditional media it has enjoyed online,"
says industry analyst Greg Sterling of Sterling Market Intelligence.

Google interested in DoubleClick purchase: report

NEW YORK (Reuters) - Google Inc. (Nasdaq:GOOG - news) has emerged
along with Microsoft Corp. (Nasdaq:MSFT - news) as a contender to buy
DoubleClick Inc., presenting competition that stands to increase the
final sale price of the online-advertising company, people familiar
with the situation said in The Wall Street Journal.
ADVERTISEMENT

Microsoft has appeared less likely to win the bidding as the potential
price for the company surpassed $2 billion, people familiar with the
situation said in the Journal.

Yahoo Inc. (Nasdaq:YHOO - news) and Time Warner Inc.'s (NYSE:TWX -
news) AOL online unit also have talked to DoubleClick -- which is
majority-owned by San Francisco private-equity firm Hellman & Friedman
-- though it is unclear whether AOL is still in the race, these people
said in the Journal.

DoubleClick is using investment bank Morgan Stanley to help explore
its options, including a possible stock market listing, the Journal
reported last week. Hellman & Freidman has reportedly set a price tag
of at least $2 billion for the advertising company.

Such a price tag could amount to a hefty return for the private equity
firm, which took DoubleClick private in mid-2005 in a deal worth $1.1
billion.

Representatives from Google were not immediately available for comment.

Advertising.com to provide ad management services to NBC Universal, News Corp.

New York—Advertising.com, a wholly owned subsidiary of AOL, said
Friday that it will be the ad management service partner for NBC
Universal and News Corp.

AOL recently announced its alliance with the two media companies to
launch an Internet video distribution network offering full-length
programming, movies and clips from a dozen networks and two major film
studios. Under the agreement, Advertising.com will provide
comprehensive display and video advertising management as well as
fulfillment for the new video site and the dedicated video player
embedded on that site, as well as to its distribution partners.