Newspapers make more from online video than TV
A new Borrell Associates’ report due to be released Tuesday finds that newspaper-run websites are making more money from VIDEO advertising than TV station sites are by a ratio of almost 3 to 1 ($81 million to $32 million).
The numbers are small, but the growth isn’t, and Borrell is saying it’s just begun.
Video Ads, Paid Search Dominate Local Web by 2012
Source: Borrell Associates Inc., 2/2007
The report states that the newspaper money is coming from a new type of video ad.
Where will most of that (advertising) money go? Not to the purveyors of traditional “word from our sponsor” commercials, but to those who can offer long-form video information that their Web site visitors actually choose to see.
A few years ago, Doc Searls, one of the authors of The Cluetrain Manifesto, wrote that “there is no demand for messages.” He argued that the illusion of such a demand was one of the central tenets of mass marketing and one that technology was helping people overcome (think TiVo). We’ve been so busy “driving traffic” that we forgot to ask if anybody really wanted to get in the car.
It’s important to understand, however, that this has never been a desire to get away from advertising; it’s the unwanted nature of the beast that’s the problem.
The most important point of the Borrell report isn’t that newspapers are beating TV stations at their own game. It’s HOW they’re doing it, for this is a market that has tremendous potential for growth, especially at the local level.
Smart newspapers are offering these ads as part of their online classifieds, and there’s no reason television stations can’t do the same. Classifieds are the place in the print world where people go when they want advertising. But let’s step away from the print paradigm for a moment and look at this from a television perspective. What are video classifieds if not a series of channels in a station line-up? This is the world we need to explore, and the Web makes that possible.
This is the practice over at our old friend YouTube. YouTube sells “channels” to big advertisers, who are then responsible for providing the content for the channel. It is, in effect, long-form video advertising, and some of it is darned good. The advantage that YouTube brings is, of course, the staggering community of people who can choose to click on those ad channels. Check out their “partners” channel page. Could you do something similar? Why not? This is VIDEO, for crying out loud — local television’s bread and butter.
Borrell told me that the 2.0 world is “coming quickly,” and that media companies need only look at his projections to understand that local online search and local online video are where we need to point our guns.
The traditional mass-media forms of packaging news and selling “display” advertising around it are becoming less viable on the Internet. This new environment mimics what we know of cable TV, only with far greater interactivity and consumer control.
The most exciting thing I’ve seen in the numbers is the consumer demand for advertising, which pales in comparison to consumer demand for local news. In the end, the local media company that wins is one that can deliver a wealth of interactive content — especially video — around consumer verticals like real estate, health, automotive and other high-priced items that require lots of prior research.
There’s a general assumption out there that people are avoiding commercials, because they don’t like advertising. The Interactive Advertising Bureau goes to great lengths to point out that this isn’t true. People just don’t like to be interrupted by commercials. Will they seek out commercials? You bet.
Again, think of the enormous demand for online classifieds across all ad segments. And what is EBay, if not a place where people advertise their wares?
People need to shop and are always looking for bargains or selection, regardless of what they’re buying. While most people watching a commercial may do so for entertainment or because they have no choice, there is a small percentage that actually wants MORE information, as my friend Steve Marx constantly preaches. We need to be in the business of helping consumers find that more information.
Another piece of evidence revealing a demand for advertising is click-throughs for online ads. The rate that people click through is a crude measurement of demand. These rates vary depending on the relevancy of the content within which ads are placed — the more contextual the ads, the better the response. The average is somewhere around a half a percent, but contextual ads have much higher rates. That means some people want more, and providing long form video ads online is one way we can meet that need.
This new Borrell report is an absolute stunner and perhaps one of the most important and useful pieces of information to come along in years. It will be available for general distribution via the Borrell site at noon on Tuesday.
February 12th, 2007 at 7:02 pm
Terry you are so right. I’ll stop my day in its tracks to watch one of the new Apple advertisements when it first comes out - it enntertains me and it confirms my prejudices, what more could I want? And when I’m looking for new equipment/new DVD etc, ads and users comments are where I go for info.
February 12th, 2007 at 11:54 pm
[…] Newspapers make more from online video than TV. Yikes. Who would have seen this coming a year ago? Terry Heaton has lots of details. […]
February 13th, 2007 at 12:00 am
[…] Borrell Associates is releasing a new report today that reveals that newspaper sites grossed $81 million in local video advertising in 2006, compared to $32 million for local TV sites. “Print media are using the internet as a crossover platform to tap traditional TV advertisers, just as stations (and others) are trying to use the internet to tap traditional print advertisers,” reads the report. Terry Heaton calls it “an absolute stunner.” Just consider for a moment that local TV has been at the forefront of video innovation for decades — until now, when we’re facing the greatest revolution in video to date. Portals (and other pure plays), national news sites and newspapers are beating local TV sites in video innovation and revenue generation. How important is video? Borrell goes on to predict that video advertising will skyrocket to make up one-third of all local online advertising in 2012, just below paid search. But it’s not the traditional :15 pre-roll that will generate all the revenue, but long-form advertorial video that’s associated with key verticals such as real estate, health and automotive. Isn’t it interesting in the history of business that companies that believe they have the most expertise in something are the most likely to fall behind in times of tremendous change? Let’s hope local TV wakes up to the fact that we’re dreadfully behind, and we need to take large, aggressive steps to catch up, from technology to original content to sales. […]
February 13th, 2007 at 6:32 pm
Terry, your reference to the cable industry is spot on. Go ask an LOCAL ad sales manager at Cox or Comcast how many people are tuning into their real estate channel, automotive channel and health channel all launching as part of their digital cable package. The answer is hundreds- per channel- every week. Sure those numbers pale in comparison to the number of viewers watching a late news. But therein my dear Watson lies the real point. Late news viewers are there to watch news, not a real estate ad. Conversely, how valuable to a real estate company are those people watching the real estate channel? Very, of course. And a local television stations’ real estate channel will be web-based and not restricted to cable-only households with a digital box.
Oh yes, make no mistake, the cable ad sales folks are on the street today selling those opportunities. Can you hear the sales pitch now: “Mr. auto dealer, just take 10% of what you are spending in each of the “news stations” and convert it to messages talking directly to local consumers looking for automotive information.”