|2009 Ad Spending|
It seems all eyes in the media industry are on the data illustrated in this chart. And for good reason. Over the next few years billions of dollars in TV ad spending will start migrating from TV to online, following the viewers to their preferred viewing platforms. Much of the spending will stay with the big media companies (who generate the lion's share of television content) as they carefully craft online commercial ad strategies and new subscription models.
An Ad Age columnist a few weeks ago described in detail how addressability and interactivity (leading to greater consumer engagement) could enable television content owners to actually make more ad revenue from online video than traditional television.
But online video is still in it's infancy and the spending shown in the chart above is pretty much aligned with actual viewing. As I pointed our in a blog post last year, 98% of video consumption is still happening on traditional television. Looking at it another way, the average American watches nearly 160 hours per month of TV and just over 3 hours of Internet video.
We all just think we are watching a lot more video online because we are snacking throughout the day, watching lots of short clips that don't really add up to a lot of time, and leaving the longer sessions for the television. This is going to change quickly as we start connecting our TVs to the the web in mass. As I pointed out on this blog a few months ago, 24% of US homes have a tv-web-connection. And a recent study from consumer electronics site Retrevo (as reported in Mashable) shows that people under 25 watch a quarter of all their TV shows online.
The broadcast networks are carefully and impressively preparing for the inevitable. I recently sat through a one-minute pre-roll ad on on MSNBC.com where I was catching a Brian Williams news segment. I was given the opportunity to watch shorter ads, but with more frequency. The one-minute ad was well targeted, reasonably entertaining and presented in a clean interface. I didn't mind at all. It seemed worth the price to watch a piece of content exactly when and where I wanted to see it.
And even after every minute of television programming finds it way online, we will continue snacking (our "crisis of attention" as Steve Rubel call it, is permanent) forcing TV programmers to repackage and distribute their longer form content in new ways, yet also provide big opportunities for smaller, niche-oriented content producers and emerging video ad networks and exchanges.