According to a new Nielsen report, about one-third of U.S. consumers streamed long-form video content, such as a TV show or a movie, from the web through a paid subscription service, at the end of 2011. Nielsen also dove into researching who is watching content through the two dominant web streaming subscription services, Hulu Plus and Netflix. In terms of age, 31% of Hulu users are between the ages of 18 and 34 and more than a third are over the age of 50; 40% of Netflix users are in the 18 to 34 age demographic with only 17% over 50. In terms of, 57% of Netflix’s audience and 59% of Hulu’s audience is female. Women also account for 64% of total time spent watching content on Hulu and Netflix. Nielsen tags the gender data as something of interest; in its recent Cross-Platform Report, Nielsen had found that women stream less online video overall than men. And in terms of race, three-fourths of both the Hulu and Netflix audience is white, while more Hispanics are using Netflix (16%) than Hulu (11%).
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Big Advertisers Bet Big Bucks on YouTube
If you needed a sign of just how audacious YouTube’s $100 million experiment in original content is, consider the asking price for advertisers: as much as $62 million for the exclusive on a package of “channels” in categories such as music or pop culture.
No one has paid that yet. Early deals are in the $5 million to $10 million range, but the aggressive asking price reflects the ambition for YouTube’s 96 premium “channels,” designed to bring to the site TV-like appointment viewing, as well as TV-like advertising dollars.
A smattering of the nation’s biggest marketers have signed on, including Unilever, which is sponsoring “Young Hollywood Network,” founded by well-known YouTube star R.J. Williams, Toyota, which is backing a host of channels targeted at women, including “Cafe Mom,” “Kin Community” and “Mom’s View,” and GM, which signed on last week to sponsor Red Bull’s action sports channel and a package of automotive-focused channels. Chrysler, AT&T and Lowes are also appearing on channels that have already been launched.
YouTube started conversations with brands and agencies in November in hopes of persuading them to part with chunks of their TV advertising budgets on a site once known for cat videos.
But there was a catch: To get exclusivity in the premium channels, buyers also had to make a huge investment across the rest of YouTube. While deal terms varied, it was typical for YouTube to guarantee that just 20% of the ads would appear in the new channels, with the rest running in other videos on YouTube.
“YouTube is a pretty vast place,” said one buyer familiar with the terms. “You are spending an awful lot of money on things that are nontargeted.” The terms reflect how YouTube hopes to use the channels — some fronted by celebrities or produced by major studios — to bring brand dollars into the rest of the site, which is a bit like the Wild West, with a wide variation in quality.
By making the sponsorships of channels and packages of channels exclusive, YouTube aims to ignite a frenzy among marketers afraid of being left out.
According to a rate card distributed to ad agencies, two hot verticals — music and pop culture — were $62 million apiece for one-year sponsorships, a package of sports channels was $40 million, an autos package was $16 million and a mom’s interest package $10 million. YouTube has since subdivided the verticals into smaller packages in categories such as “Celebrity News,” “Music and Film” or “Geeks, Gadgets and Games,” which cost $10 million to $20 million to sponsor. YouTube also lets advertisers exclusively sponsor a single channel for anywhere from $2 million to $4 million on an annual basis.
None of the megapackages have sold, but GM and Toyota’s deals are thought to be well north of $10 million for packages of channels, while Unilever is in the $5 million range for “Young Hollywood,” one of the channel partners with a long history of producing popular celebrity programming on YouTube.
The deals work out to $15 to $25 per thousand views, competitive with broadcast TV ad rates. At a low-end sponsorship cost of $500,000 a month, an advertiser would need roughly 25 million impressions to net a $20 CPM — unlikely for most startup channels.
Channel producers will make money from ad impressions that run on the videos they create or curate within the channel, but only after YouTube recoups its initial investment in them, which ranges from a few hundred thousand to $5 million. Those deals were also struck on a variety of terms, but the expectation for most is that they will clear their advances back within a year. After that, YouTube will split revenue 50-50.
The early advertisers are also big TV spenders, and while most have ad budgets devoted to digital, spending at these levels will inevitably mean shifting some dollars that once went to TV.
“In a world of finite marketing budgets, you do this in place of doing something else,” said David Cohen, chief global digital officer of Interpublic Group’s Universal McCann. Mr. Cohen has been in talks with YouTube for several clients.
The biggest obstacle to getting TV ad dollars is keeping viewers’ attention longer. Google VP-Content Robert Kyncl said in January that YouTube users were spending 30 minutes a day with the service, up from an average of 15 minutes in May. That’s still a far cry from the more than average five hours Americans spend watching TV.
It’s enough time that an advertiser like GM, which spent $240 million on Internet display advertising in 2010 (and nearly $1.2 billion on TV) according to Ad Age DataCenter, must place a bet there. “When you have this much fragmentation taking place among audiences, its important that you touch all channels,” said GM spokesman Tom Henderson. “We don’t think one medium will replace another anytime soon.”
Google is expected to capture $2.58 billion in display-ad revenue in 2012, or about 16.5% of the overall market, according to a recent estimate from eMarketer. In an estimate last spring, Citibank said YouTube revenue would exceed $1 billion in 2012.
Yes, Generations Y and Z are more Connected
There’s a reason that some call those born since the early 1990s the Internet generation.
A new Nielsen study finds that those Americans – along with the Millennials (typically described as born between the early mid-1970s and late 1980s – are the most digitally active and represent a larger portion of those owning smartphones and tablets. They are also among the biggest users of online video and social networks.
Nielsen and NM Incite’s “State of the Media: U.S. Digital Consumer Report,” out today, finds that Americans 18 to 34 – a group that makes up 23% of the U.S. population – consume more digital media than other age groups.
The researchers have coined a new term for these digital consumers, Generation C, which encompasses some Gen Y and Z. “What we think is distinct about them and why we are calling them ‘Gen C’ is their fundamental connectedness,” says Radha Subramanyam, senior vice president of media analytics for Nielsen.
“They have grown up connected to devices and to each other in a really different way than before,” she says. “If you look at all the device usage and what they literally have on their body all the time and how even when they are talking specifically to each other, they are also connecting to others who are not even in the room, through technology, then you start to get a sense of this whole connected, native Internet generation.”
A breakdown of various categories, based on a meta study of Nielsen data in the fourth quarter of 2011:
— Smartphones. Among smartphone owners, 39% are 18-34. The next highest age group, those aged 35-49 make up 30% of smartphone owners, followed by ages 50-64 (20%), ages 65-up (6%) and ages 13-17 (6%).
— Tablets: 33% of tablet owners are 18-34. The next highest age group, those 35-49 make up 29% of tablet owners, followed by 50-64 (21%), ages 13-17 (11%) and ages 65-up (7%).
— Social networks and blogs. Those 35-49 make up 28% of those who visit social networks and blogs, but the 18-34 age group comes in next, making up 27%. Those aged 50-64 make up 22%, ages 2-17 (13%) and ages 65-up (9%).
— Online Video: The 35-49 age group nudges out the 18-34 age group again, making up 28% of online video watchers, compared with 27% ages 18-34. Those 50-64 make up 22%, ages 2-17 (14%) and ages 65-up (10%).
— TV watching: Young viewers 2-17 tied the 18-34 age group, each making up 23% of TV viewers, followed by ages 35-49 (21%), ages 50-64 (20%) and ages 65-up (14%).
Breaking down digital consumers in other ways, women make up a bigger percentage than men of those who use social networks and blogs (54% to 46%) and watch online video (53% to 47%). Men are more likely to own a tablet, making up 53% of tablet owners; smartphone ownership is evenly split with women and men both making up 50%.
Whites make up 79% of those who use social networks, 78% of online video viewers, 61% of smartphone owners and 60% of tablet owners. Hispanics make up the next largest group of smartphone (17%) and tablet ownership (15%), followed by African-Americans and Asian-Americans.
NBC News Places Bet on Social TV
The death of broadcast TV news has been greatly exaggerated. And social media might just breathe new life into it.
NBC is betting social channels can invigorate “The Today Show,” “NBC Nightly News” and its other news programs. The network, which leads in the nightly news ratings, has gone all-in on social, building a solid community of 10 million followers across several social platforms. Its personalities, such as Ann Curry, Rachel Maddow and Brian Williams, eclipse the 5 million mark on Twitter alone. And the network has a strong following on Facebook, Instagram, Google Plus and Tumblr.
That’s good news considering that NBC, like its competitors, faces a demographic challenge: TV news is for the olds, of the roughly 25 million viewers who tuned into the Big Three’s nightly news programs, 27 percent were in the 25-54 age range. In other words, there’s a reason why so many Viagra and heart medication commercials are aired during the evening news slot: the audience is old, real old.
The question is what to do with all these social network followers — and whether they can invigorate the rather tired genre of TV news. The key for social TV, according to Ryan Osborn, senior director of social media at NBC News, is pushing viewers to be active on social networks rather than simply passive couch potatoes.
“Social TV is a cross-functional effort at NBC News,” said Osborn, who leads a team of three. “To tell stories at scale across all platforms takes a lot of coordination. To make this happen, we bring together teams from editorial, marketing, ad sales and technology to help foster community around the programming that we distribute to a mass audience on television.”
For the first time, whether it’s through the real names on Facebook or the personas on Twitter, television networks are able to see how television drives conversations. This digital record, and the data around television viewing, is what both advertisers and content producers have been waiting for. Advertisers can now see what content is popping in real time and also able to measure, through social-media analysis and monitoring companies like BlueFin Labs and Trendrr, how digital conversations are driving TV viewing.
For example, NBC News worked with Toyota for “The Today Show.” NBC and Toyota created a campaign on Today.com, Facebook and Twitter to drive buzz around the early-morning show’s concert series.
But for NBC News, it always comes back to the story. For example, there’s Education Nation, a town hall that was broadcast live on NBC and incorporated social media throughout multiple platforms (primarily Twitter and Facebook) so viewers could comment on the state of our education system. Partnering with Mass Relevance, a real-time social-curation platform, NBC News set up filters around this conversation that pulled blog comments, Tweets and Facebook status updates (around the clock) that could then be pushed onto TV when the show airs or even through a widget on its site. There were 342 teachers in attendance, more than 2,000 people participated in the event through the special website (educationnation.com) that reached 52 million viewers, 350,000 Facebook posts and 19,000 Tweets. The network’s use of social media garnered them a Shorty Award nomination in the Best Use of Social Media News category.
“At the end of the day, our goal is to tell the best stories possible,” said Osborn. “Social TV is a real-time focus group that can help shape storytelling, and it is becoming integral to the news gathering process.”
Cable Companies Prepare for Battle with Digtial Competition
America’s largest cable operator and largest online video company are heating up the battle for the country’s eyeballs.
Comcast is rolling out a new streaming on-demand offering called Xfinity Streampix, which will bring thousands of TV re-runs and older movies to subscribers of its high-end double- and triple-play packages. For those who subscribe to more basic packages, the streaming service will be priced at $4.99 above their current rate.
Cable companies are fighting for dominance in an increasingly crowded field of competitors, among them Netflix, Hulu, Dish Network, DirecTV, Verizon Inc. and Amazon.com.
Importantly, Comcast has no plans to make Streampix available as a standalone service: To get it, you must be subscribed to Comcast’s cable TV service. That means so-called cord-cutters, or Internet-only subscribers, need not apply. But the Xfinity Streampix offering can be seen as a direct competitor to streaming services like Netflix and Hulu Plus.
Over the past few years, there’s been some debate about whether those services could be cable killers, but lately it’s been mostly accepted that they serve more as a complement to user’s existing pay TV services. Now, Comcast is making a good amount of similar content available through its own service, at a price that’s lower than the $7.99 those streaming services charge, and even giving it away to its highest-paying subscribers. That means Comcast subscribers could have less reason to pay for an additional streaming service.
Comcast will be launching the service later this week, adding thousands of movies and TV episodes to its already expansive library of streaming content available through XfinityTV.com and on its XfinityTV iPad app. To launch the service, Comcast has done deals with Disney, NBC Universal, Sony Pictures, Warner Bros. and Cookie Jar (which does kids programming like Inspector Gadget and Paddington Bear).
While Comcast’s XfinityTV offering has always had recent episodes of broadcast TV shows through a distribution deal with Hulu and CBS, the new service will expand its library by making available older, back-catalog content. At launch, StreamPix content will include previous seasons of TV shows like 30 Rock, The Office, Grey’s Anatomy and Lost, as well as movies such as Brokeback Mountain, Ocean’s Eleven and The Big Lebowski. A Comcast spokesperson told me that the company plans to add more titles as time goes on.
Comcast will also be making the service available on multiple screens: In addition to putting Streampix on the web and on its Xfinity iPad app, the titles will be on Comcast’s cable VOD platform. It’s also planning to expand availability to “additional screens and devices” as time goes on, which will include Microsoft’s Xbox 360 and Android devices. Comcast may be the first cable provider to offer a competitive product, but they certainly won’t be the last. Stay tuned…
New Report Shows Disparity in Mobile Advertising
According to a new report from mobile advertising and analytics firm Flurry, there is a significant disparity between the amount of time being spent on mobile (23%) and the amount of U.S. ad dollars directed toward the media platform (1%) in the U.S. “We believe the main reason for this disparity is that the mobile app platform has emerged so rapidly over such a short period of time. With the iOS and Android app economy only three-and-half years old, Madison Avenue and brands have yet to adjust to an unprecedented adoption of apps by consumers,” said Peter Farago, VP of Marketing at Flurry, in a blog post. Other interesting tidbits from the report include:
Upper middle class consumers aged 25 to 34 are the most likely demographic to interact with mobile ads, something Flurry believes bodes well for the future of the mobile platform.
Print media is going in the other direction; it receives 29% of U.S. ad dollars but only 6% of time spent.
The web: 16% of ad spend versus 22% of time spent; Television: 43% versus 40%.
TV Upfront Inspires Digital Copycat
The TV Upfront may be the biggest week of the year in television: five days in May when television stars and network executives converge in New York to tout their hot new shows for advertisers.
Now, online video wants its turn. This April the biggest online media outlets—including Google Inc. and its YouTube site; Yahoo Inc.; Hulu LLC; AOL Inc., and Microsoft Corp.—are planning a two-week event in New York. Each company will take a different day to woo advertisers by presenting different marketing opportunities such as revealing plans for coming video programming.
Coming as more companies are creating more original video programming specifically for the Web, the event signals an intensifying effort by the online video world to challenge television.
The event is dubbed “Digital Content New Fronts,” a not-so-subtle reference to the “upfront” name for television’s week of glitzy presentations and lavish parties. The upfront is a prelude to weeks of negotiations with advertisers about purchase of ad time for the coming fall season. After last year’s upfront, advertisers committed to spend $9.3 billion on the broadcast networks, the lion’s share of networks’ prime-time ad inventory, estimates John Janedis, an analyst at UBS Securities.
TV drew $60.7 billion in advertising last year, estimates eMarketer. In contrast, ad spending on online video in the U.S. totaled only $2.02 billion— but it was up 55% from 2010. More than 100 million Americans watched online video content on an average day, a 43% increase from the year prior, according to comScore.
“There is a big gap between the time consumers are spending on digital platforms and the amount of ad spend” that the business is seeing, said Mickie Rosen, senior vice president of Yahoo Media Network.
The online video ad market needs to be better organized to make it easier for marketers to buy spots, said Mr. Kinsella. Online media outlets hope that by aligning their efforts they have a better chance of persuading advertisers to commit early to online ad packages—just like for TV. Most online ad packages are bought closer to when they appear.
Getting advertisers to commit in advance will give digital companies better visibility of what revenue will be and allows them to invest with more confidence in new programming, said Yahoo’s Ms. Rosen.
This was a “natural opportunity for us to sit together and think how we can push the industry forward,” said Janet Balis, head of sales.
Web TV’s New Lineup
Hollywood veteran Brian Robbins has a new production studio under construction and 35 shows in development. There’s a sitcom set in a high-school bathroom, a talk show modeled on “The View” but hosted by young Twitter celebrities and a series about an outlandish teen wrestling league.
Mr. Robbins, a producer and director known for Eddie Murphy movies and TV shows including “Smallville,” plans to produce 120 hours of teen programming this year, all of it destined exclusively for the Web.
Mr. Robbins is part of a teeming new ecosystem, as some of Hollywood’s biggest names—with support from Silicon Valley’s deepest pockets—are racing to create new shows, and in some cases, dozens of them, for the Web. A former NBC programming chief is launching three YouTube channels in the coming months. The creator of the CBS juggernaut “CSI” is filming a series of YouTube thrillers. Stars like Tom Hanks and Kevin Spacey are at work on new shows for Yahoo and Netflix.
For veterans of movie studios and TV networks, the Web beckons as a creative playground, unhindered by studio control and the threat of swift cancellation. Show creators often own the content they create for the Web, which means they’re free to spin off their concepts later for movies or traditional TV shows—and could stand to gain a bigger share of the profits if a project takes off. Perhaps most importantly, no one wants to be left behind in a shift that could represent the future of television.
Google, which owns YouTube, is paying an array of producers, from seasoned pros like Mr. Robbins to self-made Web stars, to create 100 new video “channels.” Google is giving each channel up to $5 million in funding, according to people familiar with the deals. The first channels began launching last month, and more will continue rolling out through the summer.
Hulu this week premiered its first scripted series, “Battleground,” about staffers backing an uphill Senate campaign in Wisconsin; it will be followed by an off-kilter travel show from “Dazed and Confused” director Richard Linklater. For the spring, Yahoo is developing “Electric City,” an animated series about a dystopian society of the future, co-produced by Mr. Hanks, who will also voice a character. Yahoo is already rolling out about 20 original shows each month, mostly short-form reality shows.
Yahoo’s programming choices are often driven by data, says Ross Levinsohn, the company’s executive vice president of the Americas. After tracking the torrent of clicks that news stories about wedding engagements routinely get, Yahoo commissioned “The Ultimate Proposal.” In each episode of the reality show, which Yahoo says has attracted 11 million total views since its premiere last October, a host “helps single people from all across America step up, take a knee and deliver the marriage proposal of a lifetime.”
Netflix is trying to lure monthly subscribers and brand itself as a home for boutique programs—as HBO once did—with series such as “Lilyhammer.” An offbeat drama about an American mobster (Steven Van Zandt) abroad in Norway, it launched earlier this month. Coming next to Netflix: “House of Cards,” a drama produced by David Fincher and starring Mr. Spacey as an ambitious politician, and a revival of the cult TV comedy “Arrested Development.”
Despite the influx of big-name talent, it’s always hard to predict what will catch fire online—a homemade video of a precocious pet or amateur singer can command the kind of viewer numbers that network executives only dream of. As a result, some of the TV veterans crossing into the Web are forming partnerships with self-made Web stars, hoping to leverage their expertise and fan bases.
YouTube hopes that official channels offering a steady flow of content and consistent quality will compel advertisers to spend more than they would on typical YouTube fare. In addition to the familiar pre-roll advertising that runs before a video, YouTube’s team is pursuing channel sponsorships and deals to create Web shows around products. Channel creators will receive a majority cut of any advertising revenue, but only after Google recoups its investment in the channel.
Google, YouTube, Yahoo, Hulu and other major media companies will present their new shows to advertisers in an April event similar to television’s traditional “upfront.”
The Web channels will be measured by a more direct set of data, including the view counter displayed under every video on YouTube. Each channel also displays a “subscribers” figure, the number of viewers who click a button to be notified by email when new videos go up.
YouTube is gathering metrics on the channels’ prospects before they even launch, said Robert Kyncl, Google’s global head of content. YouTube managers score each channel on factors such as long-term marketing plans and cross-promotion planned with other channels. These status reports are color-coded on a sort of spreadsheet. Looking at green, yellow and red flags on this “heat map,” Mr. Kyncl can track signs of trouble—literal red flags—across all 100 channels. If a channel fails to attract viewers, those color grades could eventually indicate when it’s time for YouTube to pull its support. “Once it’s all green and it’s still not working, then sometimes it’s just that the idea was not good. There will be cases like that,” Mr. Kyncl said.
The Death of Television is Greatly Exaggerated
National advertisers believe that television advertising has become more effective, according to a new study, and many are allotting more of their media budgets to TV.
In a new report from Forrester Research, the number of national advertisers who say TV advertising has become more effective in the past two years has tripled. They said that TV advertising will account for 47% of their media budgets, a 6% increase from the 2010.
The advertisers in the study said they were interested in data other than Nielsen when it comes to TV, with 72% expecting the quality and accuracy of set-top-box data to improve over the next few years.
Almost half of the advertisers surveyed said they are testing or planning to test advanced TV advertising, including addressable ads. They are also doing second-screen advertising, with 18% running synchronized ads on TV and online and another 31% saying they will try that strategy in 2012.
Digital Video Advertising Heating Up
FreeWheel has published its latest quarterly Video Monetization Report, which indicated that viewers continue to accept an increased number of ads in order to view long-form content (20+ minutes).
In fact, there are now nearly seven video ads per long-form video, which is more than double the ad load from early 2011. In addition, Mid-roll video ad placements witnessed the biggest growth in 2011.
The report analyzed more than 45 billion video views and nearly 28 billion ad views, based on aggregated data from FreeWheel’s customers including: ESPN, Discovery, AOL, VEVO, Turner, FOX, CBS, A+E Networks and more. Here are some other interesting findings:
From Q1 to Q4, video viewing grew 47% while ad viewing grew 49%. However, the ratio between the two has recently narrowed: by Q4, three-fourths of all digital video content had a video ad associated with it, up from just over half in Q1.
The iPad has its own viewing dayparts distinct from other wireless devices and wired/broadcast viewing: an early primetime during the morning commute (7am to 10am) and a second primetime between 9pm and 11pm.
Professional video viewing dipped in Q4, partly due to seasonal viewing patterns and a dearth of new, professionally produced content showing up in linear and digital markets.
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