Update: my simple methods of modeling might overstate the number of ads by as many as 4-10 commercial spots, depending on what percentage of the ads are typically local rather than national spots, and what percentage is allocated to network promos. The local ad load (even if the ads are for national brands) would likely not be included. I’m not sure what they will do with network promos.
We recently learned that the television networks’ plans with all the talk of Nielsen competitors and convergence measurements were based on a pretty simple philosophy: for the first 3 days videos of shows are available online they will carry exactly the same national commercial loads as on television. The networks want to be able to charge for them online as well as offline.
So what is currently five or six spots when you’re watching Heroes on NBC.com or Hulu would balloon to around thirty-two thirty second spots if things go according to the plan. That’s more than five times the commercials you currently have to endure online.
According to Jack Wakshlag who heads up research for Turner (TBS, TNT, Cartoon Network, Adult Swim, TruTV, etc) and has participated both with the CIMM initiative and is part of the group discussing Nielsen’s “TV Everywhere” convergence measurement plans, the plan is to have the same commercials in programs online as aired on TV for the first three days.
TV ads are bought and sold based on a metric called C3 (live commercial viewing, plus 3 days worth of DVR viewing) and they want to extend this to capture some of the online viewing.
I’d originally balked at those plans precisely because the commercial loads in online video are so different than on TV, but according to Wakshlag the plan is to make them the same, at least for 3 days.
I know there will be a lot of complaining about the increased ad loads if it happens. People will claim that more people will download the shows via peer-to-peer, or that the increased commercials will chase people to other sources for the content. I’m sure that will happen to a degree, but at least for now, I don’t think it will be to a large degree. I don’t fault the TV networks for wanting to do this, it makes a lot of sense to me. As does their desire to get the measurements to support it sooner, rather than later.
I view this as a pretty intriguing story, particularly what will amount to huge increases to the number of ads in online video streams of TV shows. But the first time I posted about it, not all that many people read it. So I am trying again to assess whether this is actually really a big deal story, or whether it’s like my obsession with Video On Demand where I am really interested, but most people just don’t really care about it.
By the way theoretically On Demand will ALSO will carry the same commercial loads as the TV airing — and props to AMC’s Mad Men which already does this, whether the advertisers are paying or not.
if it helps to keep the tv show on the air than i am all for it
I wonder when they think they can get all the ducks in a row to get this started? I’d guess it’s impossible for this season, and even tough for next season.
I can empathize with the networks placing more ads with services like Hulu; this is business after all, but when I purchase a license for video on demand I would expect that there would be no commercials. Again, no biggie so long as they don’t get carried away with it.
If you want to be smart you fleece slowly so there isn’t a backlash…
Go to one min per commercial segment for 12-18 months then increase to 90….
For some reason, I find this more irritating that when I’m watching an actual television. I think it’s my mindset when I’m watching online and when I’m watching a TV. When I sit in front of the computer to stream a show, I have a feeling of being held captive until the show is over and I’m impatient about commercials. I suspect it’s due to expectations. We know the amount of time for television commercials as opposed to the “unknown” amount of time for streamed advertisements.
Bill, indeed based on the Nielsen statements even next season will be a reach. The TV nets definitely want Nielsen to be ready for it by next season — they want it ready by summer 2010, but for now Nielsen is saying “2011″. It will be interesting to see whether the networks can speed Nielsen up.
I wonder what the relative cost of broadcasting over the air, or through cable, is to broadcasting online.
I would imagine that it costs less (in capital spending) to show a TV episode online than to broadcast through the air.
If it costs less to broadcast an episode over a certain medium, then the revenue they try to get from it should be less as well.
Just Tuned In, I think it’s the other way around. The incremental costs of additional viewers online DO have an expense (bandwidth). There is no incremental costs like that for TV/Cable/Satellite. Whether 1 or 100 million watch, the costs are fixed. On the Internet they are variable based on usage.
Thank god for torrents.
I see this is a way to drive people away from legal online and (hopefully) back to broadcast.
Frankly, it makes me more likely to not watch online (which I was so happy to do legally… in fact, I altered my viewing habits to watch those things less accessible online the day after… so, basically anything I watch on CBS or CW or cable, as well as House on FOX) and instead I will to wait until I have time to watch on DVR and skip the commercials anyway. A couple minutes per show I could handle for the convenience of being able to watch while there was downtime at work / anywhere I happened to be, but the full 15-16 minute broadcast commercial load is simply too much.
I approve of this.
I’ve said it before: i’d rather be forced to watch commercials on a dvr’d show (no fast forward) than have that show be cancelled due to low ratings.
I’m guessing local ads wouldn’t necessarily be included in this and they’ll probably run fewer in-house ads (no need for “coming up next…” ads or teasers for the local evening news), so it would still be fewer ads than regular TV.
I think it makes a lot of sense to try to find that threshold of how many ads they can put on without turning off viewers. I think viewers will definitely tolerate more than the 5 or 6 current ads. Though, it may be better to increase the ads incrementally so fewer people notice enough to complain. Going from breaks with one 15- or 30-second ad to breaks with 5 is quite the jump and people would react more than if they start by increasing it to 2 or 3.
Holly, it would probably have been better if they started high and winnowed it down — at least in terms of user complaints. The other way around is a tough road.
On the other hand there is no converged C3 to worry about if the national ad loads are not the same, so if C3 is the plan online and off, they will have to have the same ads online. There will be slightly less load than what’s on TV due to local (I’m not sure what will happen w/promos). I’m also not sure what they will do after three days.
The plan is to rotate the ads out after three days (no more C3 in play) but whether that would result in much lighter ad loads after 3 days and whether that’s potentially behavior changing if people would rather wait a few days for fewer ads…
it’s about time online views started having an actual affect on a show’s economic viability, but I don’t think they should go straight to 32. They should increase ads slowly, so people don’t get so bogged down right at once.
Am I insane in thinking that this is a step toward a more easily-quantifiable sales platform for online-only programming, i.e. shows like Dollhouse that are underperforming on broadcast but could possibly still turn a net profit in online viewing, or even for Hulu-type “web-only” shows? Or do we think advertisers are confident enough in the networks’ own online metrics?
Well, if they can’t get this up and running until at least next season, they can start adding a few ads now to acclimate viewers.
I don’t think the extra ads (even the full load) will make people wait three days if they don’t have to.
I think the solution to customer complaints about more ads in online streaming video is the networks offering a fee base premium service that would offer the programming commercial free to counter the loss of ad revenue. Cable Cos could offer it as an On Demand a la carte package with season passes and such. If you want to watch it for free you have to deal with commercials, if you want the convenience of commercial free viewing you have to pay for it. I think that would be a win/win for the networks, and the customers. People are less likely to balk at more commercials if there is another option. Not everyone would be happy about it, but you can’t please everyone and still make money.
johnthemon, that’s an interesting strategy given that ads can be added to online streams far sooner than the convergence measurement can be put into place.
Drew, advertisers do not want to rely on the networks online metrics, that’s why most of the players involved want Nielsen to get involved with “convergence” measurement.
And while I think it could mean that shows that are borderline in current viewing metrics may be saved by high online viewing, I think we’re a long way from having a show that is little viewed on television being “saved” because of all the extra online viewing.
I personally think that going from 5-6 to 32 commercials all at once is a big mistake. It will drive people to other sites.
I think ramping up the number of commercial would make more sense to get people gradually used to it.
The thing that networks/music companies are just starting to clue into is that it must be easy for the consumer as there are many alternatives available. Annoy them with too many commercial at once and they will drive the users to other sites.
For me I rarely watch the on-demand video within a day or 2 so I would just make sure that it was 3 days if I could not find the content anywhere else.
For this to work they must be able to shut down all the other alternative sites.
We do not get Hulu in Canada anyways which is very annoying as I pay for ABC, CBS, NBS on cable but cannot access the Hulu wetsite without playing around with proxies and fooling Hulu into thinking that I am in the states which is just not worth the trouble when content is available elsewhere. Up until recently, when the streaming starting to become readily available, one of the few instances in which I would use P2P was when I missed an episode of a show that I really cared about. If Hulu was available then I would have used it.
I wonder if they might possibly sell only some ads as converged. Keep two sets of numbers, one converged and one not, that way they don’t have to worry as much about people tuning out of online video. I do think there will be tuning out online. While I don’t think people will turn to pirating in droves, I think they will likely turn to their DVRs.
Mike, the Networks can force the other sites to air the same commercials as they do nationally. If those other sites don’t agree they will not get the rights to stream the networks programming. So that really isn’t an issue.
I’m surprised at this. Well I totally agree with the need to increase the commercial load, I think the networks might be in danger of trading in long term potential for a boost in short term profit.
The real potential in online video advertising, is that it can be different for every single viewer, and sites can collect a lot more info about users than networks can, and sell more user specific ads ads at a hefty premium. Google turned that philosophy into a goldmine for search ads, now Hulu and the like need to find away to take advantage of that potential for online video. If the networks decide they want to sell advertising in the exact same way they do for television they’re going to lose out on that. An online viewer will be worth equal to, not more than a television viewer.
I think it if runs for the same amount of time as on TV, it will be annoying on a smaller screen. The Hulu ads as they are now are fine – because once U get sick of them, they disappear. On the otherhand, if advertisers are creating more interesting ads for online – not ur standard issue “Dove with moisterizer” stuff, then perhaps it could work as well.
Are advertisers going along with convergence? Some are already on hulu, but many aren’t.
Tommy, I am talking about shutting down the stuff that is on zShare, or MegaVideo or other files shares or all the specialty “Watch” sites such as “WatchWarehouse13″ etc.
There is a ton of content out there on the file upload sites that feeder sites access. Look at CastTV where it could come form zShare, MegaVideo, Hulu, Amazon etc.
I am sure a lot of this content has been copied and would not have commercials in it. This will be very difficult to stop as it is just too easy to set up new sites.
For certain shows having commercial interruptions really messes up the flow of the episode. I like sites that play the commercials at the beginning before you watch your show.
Also I don’t think the ad time matters as much as how many ads. I think online ads can be shorter and more impactful (with CLICK HEREs to go straight to the website). Also I imagine (as others have said) that the online ads will be more national so probably better quality as well.
When I watch on tv I flip to other tv shows during commercials (I’ll have the main show that i’m watching, and then something on Flasback to go to a secondary show that I don’t really care about but like better than commercials). I don’t think TV watchers sit through all the commercials that are played. I think online users are more likely to sit through commercials, if they are brief enough, and therefore maybe fewer minutes of commercials would actually match with how many minutes of commercials tv viewers are actually watching… I think I just confused myself.
Mad Men is trying innovative things with ads anyway. To the point where I watch the ads on my dvr replay. Some smarty advertisers have tailored ads for the show. For some of the adverts, the Mad Man logo appears with a “factoid” about the product. The commercial that follows has some history of the product or a look at how its packaging has changed over the years as the commercial message is presented. very effective in my book. more advertisers ought to try integrating their ads with the theme of the show. And i’m not talking about product placement.
“Just Tuned In, I think it’s the other way around. The incremental costs of additional viewers online DO have an expense (bandwidth). There is no incremental costs like that for TV/Cable/Satellite. Whether 1 or 100 million watch, the costs are fixed. On the Internet they are variable based on usage.”
Well, I think cable/broadcast/satellite financial model would fail if only 1 person was watching. Whereas internet would be very low cost if 1 person was watching. I think internet revenue can be made to scale with users, and therefore the scaling costs are balanced, whereas the other formats require threshold viewers to pay the initial overhead. They can’t just reduce their overhead costs to accomodate their reduced revenue if viewership goes down.
I’m not surprised this is where things are headed, and as others have said, if it keeps well-budgeted or low-rated shows going, then I think it’s worth it. But it has to have a measurable impact in the financial department! Maybe you guys could game out a hypothetical for revenue similar to that Dollhouse article and base it on this new commercial-full presentation. And for those getting annoyed at the prospect of so many ads, remember, it’s only for the first 3 days of posting! I don’t always get to catching up on a show right away, so many shows I stream should end up past that threshold.
My BIG concern, one I’m hoping someone “in the know” will address once this becomes a reality, is how all the extra ads will play into bandwidth caps. I’m on Comcast at home, which has a 250GB monthly cap now, so this won’t affect me so much, but I’m concerned about the more oppressive caps out there. A 25-ish% increase in video consumption just from the ads could really be a problem for someone who has fully embraced streaming already. I’m not sure where to take this without going off on a big tangent at the moment, so I’ll just ask a few questions:
Does anyone know approximately what the data rate is on Hulu? Is it 250MB per “hour” show at 360p, or more? How about 480p? I think that’s the key to the scenario I’m trying to imagine right now. Basically, how much extra data will I have to download with 32 ads? That could be really critical to some people on ISPs with over-the-top oppressive caps in place if they stream a lot of shows.
JustTuned — I agree with you that broadcast and cable networks that have only one viewer will fail. But that is true online as well!
still, adding 1 million more users who would watch online costs more money. Adding them on TV costs nothing extra.
When will they wise up?
Put advertising, subtle-but important INSIDE the show, then offer torrents. Better yet, a website with a list of those torrents and let other people pay for the bandwidth again.
Then, if/when they make ‘illegal’ copies of things previously broadcast, the ads go with them. Anyone else get hungry for blueberry yogurt thanks to Burn Notice? Same show: my mind has changed about the Saab car-offerings.
Why is it always the hard and complex path with these folks?
With cable the cost of the subscription goes to the local cable supplier (to get me initially connected, maintenance on the lines, power to run their system etc.), then to the local network, then to the larger network, then to the production house. That’s a lot of middle men.
Online the cost of the lines, power, etc. for internet are shared not only by those watching shows online, but everyone using the internet, so that cost per person is less. Users can go directly to the national providers website rather than a local affiliate, so fewer middle men.
Heck, users could go directly to the production houses, bypassing networks altogether, if the production houses were to put their material online directly. Of course the cost of most shows is far too large to be able produce without funding from the large networks, which will still be paid primarily by TV ads and cable subscriptions, but smaller less costly content could be reached directly. Like The Guild. Which probably DID start with a tiny number of viewers, something that could never be supported in the traditional mediums.
Anyway, I think networks should realize that watching shows online is a different experience from watching on tv and adjust their revenue schemes accordingly.
For example adjust the advertisements being shown to the specific user. If I have to watch advertisements I would at least like to watch advertisements that target my demo. This could be done by having optional user info (age range, gender, interests). OPTIONAL of course. Advertisers could actually be charged more depending on who they target. For those who don’t want to fill out the info they would just get advertisements based on the current tv model.
There are so many ways that they could make this work, without alienating online users.
JustTuned, I’m not sure you have a grasp on how online video distribution works and the costs to people providing the content that aren’t shared or absorbed by others. If you’re interested in it you could read up on “CDNs” (content delivery network services).
Though I love Felicia Day, The Guild seems the exception, rather than the rule and couldn’t survive without a Microsoft sponsorship and it is still “tiny” by relative comparisons and the videos are distributed on sites like YouTube (who absorbs the CDN costs and doesn’t pass them along to Felicia, a model Google has not yet figured out how to make money on). I think what Felecia has accomplished is very difficult or “everyone would do it.” That said, it seems Felicia would prefer full time TV work if she could get it.
Ok, so it’s cheaper to broadcast over the air, or through cable, than online?
And Greed rears its ugly head again.
Tune in next year to sad stories about how people are abandoning hulu in droves *g*
I’m too impatient to wait 20 seconds for a webpage to load. I won’t be sitting through 10+ commercials per half-hour. I just will not watch.
I agree with Travis — I think they’re wanting to drive folks back to broadcast.
I never have been able to understand why they didn’t include the commercials on-line right from the get-go. They had the market cornered and they let it go. For free.
Mel, I don’t think it was that simple. To include commercials they’d have to sell them first (unless you’re suggesting they just give them away). They’ve sold some commercials and that’s what you see now.
I’ve wanting them to finally do this.. As a Hulu regular, I would much rather the commercial formats be the same as on broadcast. I want my viewing of particular shows to increase the revenue received. I have no problem with watching commercials and do so even on hulu, however for this to work properly they should post the shows after the west coast premiere at least. Right now you can download a popular show within 3 minutes of it being aired on the east coast.
I’m strongly against this. By watching a show on your computer, you sacrifice quality for convenience. Why should I watch a show on a fifteen inch screen when I can check it out on Tivo with my 42″ TV? The only reason I watched anything on hulu was because it saved me an extra eight minutes per show during downtime at work, and my time is valuable.
If they wanted to do this successfully, they should gradually increase the commercial load instead of throwing thirty at us at once. This way we won’t put up that much of a front when our time gets stolen.
I was on NBC the other day and already got an extra 40 seconds of ads I wasn’t used to (on top of the 30 seconds). Guess I’ll be working more with the DVR!
Not a problem for me as long as they don’t start charging for broadcast programming that airs for free. I can do the same things I normally do during online commercials that I do during the broadcasts.
now i have time to pee while I’m watching flashforward without having to pause it and wait for it to buffer (i don’t know why, but ABC shows take forever to load on my computer, it might just be a coincidence but who knows)
That’s a completely idiot plan in my opinion. I refuse to watch that many commercials. I personally think that it’s unhealthy to do so. If faced with a choice I just wouldn’t watch the show online. I’d wait for the DVD to come out and pay for it. I’m willing to pay money not to watch excessive commercials. A few commercials are OK but anything over 10 minutes per hour is ridiculous. TV shows used to have only 8 minutes of commercials per hour and they’ve added 10 more minutes so that most primetime shows have 18 minutes of commercials per hour. My time has value and I don’t in spending that much of it watching commercials.
They still haven’t figured it out that if you cut the commercials down to 8 to 10 minutes per hour people may actual not FF through them and end up watching them. They’d be getting value for what they paid. As it is now, you DVR then skip through them. If they think that people are going to be willing to sit through 18 minutes per hour of commercials to watch it online they’re delusion in my opinion.
Over many years they have added too many commercials to regular TV and this has really diminished the value of the commercials and the enjoyment I get out of watching the shows on TV. This is the primary reason people use DVRs. If they had less, people would be more prone to watch them and the value would increase.
I would hope that they would be able to have fewer commercials on the internet and reap more per commercial because of it. Adding more commercials to the streaming will cause me to use the DVR and Netflix more. I understand we need to pay for our content somehow, I just think they should be able to get by with the amount of commercials they had years ago.
It is kind of like the catch 22 of our local newspaper. The Boston Globe increased the price to $50 a month and surprise, subs are down more than any other newspaper.
This is a horrendous idea. The jump from 5/6 to 32 will be incredibly noticeable and will drive viewers away. I’d guess they’ll lose enough viewers to make total revenue decrease.
Will someone explain why a 30 second ad on Hulu isn’t costly than a 30 second commercial over broadcast? When I’m at my computer watching a show, when a 30 second commercial comes on, I sit through the entire thing, watching attentively. When they are 15 seconds, there is even less of an appealing alternative, and I again watch the entire commercial.
Watching live broadcast TV, I change the channel, go to the bathroom, get food, talk with friends, etc. since there are 3+ minutes to do so. My attention is NOT on the commercials.
In the event that I don’t go to less legal means of watching TV online, and I still watch via Hulu with 32 ads per show, I’m going to mute the volume, open a new browser window to do some more surfing, write and email, or do a variety of other things on my computer, aka, not pay attention.
Isn’t there enough additional value in the more certain attentiveness of short, less frequent online ads to compensate for the fewer number? [I'm guessing the answer is no, not that I really believe it].
The first line of the 2nd paragraph should say:
Will someone explain why a 30 second ad on Hulu isn’t MORE costly than a 30 second commercial over broadcast?
I tried to use arrows for emphasis and it did not work.
I’ve updated the post, but since many comment readers never go back to look at changes to the post, here’s the update:
my simple methods of modeling might overstate the number of ads by as many as 4-10 commercial spots, depending on what percentage of the ads are typically local rather than national spots, and what percentage is allocated to network promos. The local ad load (even if the ads are for national brands) would not be included. I’m not sure what they will do with network promos.
Stacy,
The 30-second ad on Hulu may cost more per viewer than TV (hypothetically, I don’t really know that), but it would still be cheaper overall because TV gets a lot more viewers. Based on the numbers we have seen, online viewing makes up a small fraction of the overall viewing. TV regularly gets over 10 million viewers. If any show even got close to 1 million online viewers, the net would be issuing hourly press releases.
I’m not so sure that local ad load would not be included. abc.com’s player uses your IP to figure out which affiliate you should be watching, and you get a localized version, complete with watermark, and the affiliate gets one spot per half hour, if I recall correctly. I’m not sure how they work ad sales with Hulu, but I know I’ve seen the watermarked 7 for KABC.
Wouldn’t some local ads still be there? There are my local affiliate ads on ABC.com for full episodes. (Usually 2 for an hour show.)
About the OnDemand with Mad Men, I noticed that episodes of Psych on OnDemand have the same exact commercials as the initial airing from 3 or 4 weeks earlier. They’re basically the DVR version without taking up DVR space.
I think for commercials my biggest problem is what is advertised. I have digital cable & phone but, I’m still seeing way too many Time Warner Cable commercials that are usually lower quality.
Julia, is there even a C3 for local yet? I’m not sure the local ads won’t wind up being included, but the proponents championing the converged C3 metric only seemed worried about the national market. I’m guessing any inclusion of local ads will lag.
That’s true, Robert. But I’m sure local affiliates can find some way to sell it.
Online allows targeted ads. Why then will they run the same “general audience” ads?
If a viewer watches prison break, mad men, 24 and family guy….does airing a tampon ad make sense? They know what shows I watch with their cookies. They could know my exact age and sex by requiring me to log in.
Its money being thrown away.
Well, if they could remove the duplication there could be time savings as well to decrease the annoyance. On broadcast I often see the same commercial multiple times. I think I pay closer attention to commercials when they’re on the computer, so probably they don’t need to run the same commercial four times during a hour-long show.
Occasionally I run into an ad the fascinates me enough even while fast-forwarding that I will notice it. Sometimes I will watch it repeatedly. Or watch it again when I see it during a later fast forward. I’m sick.
Hey, if advertisements gets shows I want to watch onto hulu, so be it. I’m otherwise 100% OTA.
Ohhh, what a threat! I’ll just watch them 4 days after they air. Big deal!
Even if some people go to P2P, the number of viewers WILL NOT decrease by 80%. So in the bottom line, it will be worth it for studios.