Monday, January 28, 2008

Too Cheap

I believe that the cost of advertising on internet TV is too cheap.

Let me explain.

The minimum bid on Google (that will actually allow you to use the system) is 5c, or 2 1/2p. That buys you a visitor to your website. In reality, if you're doing anything vaguely mainstream, your cost will be substantially higher. Let's be very conservative and say 40p. Thats's £400 CPM (cost per thousand viewers). And it costs almost nothing to deliver.

Video ads seems to be currently selling for around £25, or, yes, you guessed 2 1/2p. But for this you have to deliver a thirty second ad, which is a fair amount of data. Media agencies argue that this is a lot more than equivalent TV advertising, but that is an apple and pears argument.

My experience is that video ads have an average click through rate of 8% - phenomenally higher than banner ads - which, on top of the brand impact, is highly undervalued, in my opinion.

But, of course, I'm being disingenious. Google isn't about the ads, it's about the targetting.

The real future for online video is with the long tail. Charging a flat fee for the delivery of video ads is stupid considering the brand impact of targeted video advertising.

Specialised, targeted video ads are the future and Google are already trying to capitalise on this with their overlay ads, but I still feel that the potential of branded ads, whether they are 10 seconds or three minutes long have a long way to go on internet TV.

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