There’s a Big Audience for Online Video

Our recent Online Insights study turned up some interesting facts on how much and what types of online video is being consumed. Check out our findings below. And check out the full report here.

Media Vegetables

Articles such as Dave Morgan’s recent Online Spin, “CBS Audience Five Times Bigger than Facebook” are always a good tonic for the raging hormones of the Internet. Dave was struck by a presentation he saw from legendary CBS researcher David Poltrak comparing the audience sizes of CBS and Facebook. According to Poltrak, in the month of October CBS attracted almost 240 million viewers. Facebook attracted 151 million unique users. But CBS’s viewers spent 210 billion minutes with the network in October while Facebook’s unique users spend 42 billion minutes with the social network.

That sounds about right. I recognize me in all of that just as I did last year at this time when Neilsen’s A2/M2 Three Screen report revealed that consumers were watching an average of 4.5 hours of television per day, compared to an average of 4 hours per week spent with the Internet. The television is never on during the day in our household but, by golly, at night the news, a couple of sitcoms, a movie, perhaps a cooking show or sports event will chew-up 4.5 hours of TV time before you know it. Then maybe someone will check quickly online for the weather before heading off to bed.

It all should remind us that the Internet is not TV – to repeat, not TV. I hate wasting time on the Internet. It happens, but it’s painful: there is a sense of loss, probably because any time spent online requires the engagement of the user; therefore, any time lost is more keenly felt. Not so TV, which is an effortless medium. It requires no engagement. It makes no demand on the user. Hence, you can be regarded as a potato while being an avid television viewer. Avid Internet users, however, are un-potato like. They are shut-ins, perhaps. Drop outs maybe. But, they are not vegetables.

Which may be a good way to launch into the media value proposition of 42 billion minutes vs. 210 billion minutes. One is mineral, one is vegetable.

Feeling the “Grudging Acceptance” of Online Video Advertising

AdWeek and others have reported that online video is winning grudging acceptance from consumers. comScore says the total number of online video viewers is up 5% in October, as well as the amount of time viewers are spending watching video, which is now 15.1 hours per month. In parallel, FreeWheel reported that in the third quarter 54% of consumers made it through the completion of pre-roll videos, up from 45% in the first quarter.

AdWeek’s story, by veteran Brian Morrissey, notes the difference that professional content makes in a consumer’s willingness to sit through pre-roll. User generated video still has a hard time being worth the intrusion.

I can relate to that: this morning I started to wait through a pre-roll to get to a professional news clip of Prince William and his fiancée, Kate Middleton. When the commercial went on for more than 10 seconds I snapped out of it and moved on to other things. But, I was ready and almost willing, and I thought – in a vivid, thinking kind of way – wow, that felt almost like television: I was prepared to outlast the commercial by turning my attention to other bits of things at my desk in order to get to the programming.

The AdWeek story makes this point. It says: “[the FreeWheel] report concludes that the Web video ad market is starting to resemble TV — at least for content that’s professionally produced.”

Which drove me back to a funny conversation I had earlier this fall with an experienced media buyer who described substantiating an online video buy with a client by comparing it to TV. Said the client, “No one watches online video commercials!” Replied the media buyer, “No one watches TV commercials!” Thus, was approval won for the online video buy.

I don’t know. The Internet was supposed to help resolve certain consumer – advertiser relationship problems. We seem happy to simply transfer them. We appear to have a problem comfort zone (All video is broken. Long live video). Maybe also a sense of denial. The AdWeek headline, for instance:

More Videos Ads, More User Acceptance

Folks are showing grudging acceptance of such interruptions

Sounds like my father could sometimes sound. “You’ll learn to like it.”

I don’t know. For days last week, Simon Sinek’s piece, “The Ad Industry Needs More Accountability” ran in The Huffington Post (suggesting either the editors were delighted by his arguments or users were) discussing the ad industry’s logical disconnects and repeated avoidances. It was a bit of a rave that, when it got down to it, was about lousy commercials on television. But the final seething bit was about online.

“The final example is what ad agencies are doing online. When advertising plays before a video streamed over the internet, viewers are prevented from fast-forwarding or skipping the ad. It’s like that scene in Clockwork Orange when Malcolm McDowell is forced to watch disturbing images while his eyes lids are held open. In an effort to force people to watch their “valuable message” advertisers are simultaneously infuriating and disturbing their customers. On sites with large video libraries, news sites for example, customers are often forced to watch the same ad over and over and over each time they click watch a different clip. Even if they don’t want to watch the whole clip, they have to watch the whole ad first. I, for one, will not visit one of the network news sites anymore because I can’t stand the thought of being forced to watch an ad before every clip. With perfect irony, the advertising is actually hurting the viewer experience of the media platform that accepted money to run the ad. As for the strategic merit, yes a viewer can be forced to watch an ad, but they can’t be forced to pay attention. That little delicacy can only happen if the advertising is entertaining or compelling enough to hold someone’s attention.”

I don’t know. I’m not feeling the “grudging acceptance” here. More to the point, as brand champions and stewards, are we really in the grudging acceptance business?

What is the real story behind Nielsen’s latest Three Screen Report regarding video?

There is a story that gets told to would be journalists about the editor that commissions a young reporter to cover a notable wedding taking place in town that weekend. The day after the wedding, the editor is surprised when a story about the wedding fails to appear in the newspaper and he goes looking for the young reporter.

“Where’s the story about the wedding?!” he demands of the reporter.

“There was no wedding,” the reporter stammers back. “The groom never showed.”

The real story, as this lesson prompts us to recognize, can hide in plain sight. Failure to recognize it when it happens is not the problem of journalists alone, however. To miss the point is something that afflicts us all.

In the case of the Internet, missing the point haunts everything to do with online video.

Nielsen has just released its latest A2/M2™ Three Screen Report and this is what it says: consumers spend 99% of their video time with television. In all, consumers are in front of the tube over 4.5 hours a day. In contrast, they are in front of the Internet four hours a week, of which only 22 minutes are devoted to watching videos. On mobile devices consumers spent an average of three minutes per week watching video.

Nic Covey, Director of Cross-Platform Insights at Nielsen, trumpeted “Americans today have an insatiable appetite for not only content, but also choice. Across all age groups, we see consumers adding the Internet and mobile devices to their media diet — consuming media anytime and anywhere possible.”

One suspects that “media” is being used as a euphemism for TV in the context of online video: as in, more and more we see consumers adding the Internet and mobile to their “TV” diet.

I’m not sure about that.

Over the past year, time spent per week looking at online video grew 35% to 22 minutes, and mobile video grew 53% to three minutes. TV video remained flat at over 31 hours, not including 31 minutes of DVR. From this data, Nielsen notes that consumers are not replacing one platform for the other; they are adding (their emphasis) platforms to their schedule.

MediaPost covered the story with this happy headline: “Nielsen: TV Continues Going ‘Everywhere’

I’m not sure about that. The evidence suggests, in fact, that TV isn’t going anywhere, which strikes me as the real story.

Why is this important? Because, as usual, the Internet seems uncomfortable with itself; it keeps looking for approval from older media siblings, principally, TV. I think this is because too many of the Internet’s primary care givers are TV people and they want this child to grow up just like the last one. “Why can’t you be more like your sister?” is the sense you get from the time-keeping and yearning over Internet video.

The Internet is not TV. Hulu is not TV. I watch video online for different reasons than I watch TV. For starters, I watch TV to relax and tune-out. Online I’m engaged, video included. Conversely, I can watch 60 seconds of someone do something absurd on YouTube. I could not sit through 30 minutes of Funniest Home Videos.

The real story (and value) of online video gets buried by comparisons to television, beginning with time spent. Online video is new media. What’s that story?

Can Hulu rescue TV (for nothing)?

Online Media Daily reports that Needham & Co. analyst, Laura Martin, was dispensing doses of reality to a packed house at the OMMA Video conference in Los Angeles last week. Referring to Hulu, she observed that it’s not especially difficult to take $3 billion worth of product (meaning, programming from Hulu’s participating owners such as NBC, ABC and Fox) and give it away successfully online to the delight of millions of users. The question is how to make money from that give-away which, Laura Martin suggested, could take the industry 10 more years to answer.

Actually, we can probably answer the question right now: Hulu won’t make money - not, at least, TV kinds of money. Some money will be made, for sure, but not TV kinds of money. So, if that means Hulu will end up squandering the equity of major media brands by offering $3 billion in programming online for free, better cut and run.

Unless Hulu is really saving TV by being free.

Consider that Hulu attracts 38.5 million viewers according to the measurement service, comScore. With such large audience numbers the business instinct is to, 1) charge for content, or 2)  insert commercials in front of those 38.5 million viewers as many times as possible. Laura Martin has ideas for both, with content fees for archived programming the most easily accessible. Other options that charge for new or existing content and/or rely on the routine of television commercials are more problematic, and Martin thinks it may take 10 years to successfully introduce those options with the audience.

With regards to advertising, Laura Martin estimates that Hulu inserts four ads per hour on Hulu. That compares to 32 30-second spots that are shown every hour on television for the same programming. It’s not clear from the Online Media Daily report if we’re meant to think that 32 commercial breaks per hour represents the model for Hulu, but the delta between four commercials an hour and 32 per hour implies plenty of revenue upside if the Hulu people would just get on with selling more of it.

Sadly (or not), they can’t. While there is programming capacity online to absorb $3 billion worth of inventory it is highly questionable whether there is commercial capacity to absorb the equivalent of $65 billion in video TV advertising, or even some reasonable fraction thereof.

For one thing, as noted by the Online Media Daily story, the average Hulu viewer spent one hour and 17 minutes watching videos on the site in the month of August, which compares favorably to 3.7 minutes for online video consumption, per viewer, across the rest of the Internet. Elsewhere, Neilsen reported that online video consumption in total had climbed to over three hours. These metrics don’t add together, but between the three of them it seems clear that the average amount of time spent consuming online video per month is still not the thing dominating people’s schedules.

In contrast, according to the first number I could lay my browser on (which happened to be at CNN.com), in February the Neilsen Company reported television viewing at an all-time high of over 150 hours per viewer, per month which it attributed to the rise in the number of cable channels (“many, many more cable channels”) and DVR and TiVo devices.

In other words – as we’ve heard before – the introduction of more relevant programming combined with technology to avoid commercials is helping sustain and grow TV viewership. From this we could take it that 32 30-second commercials per hour is not the model, even where the model supposedly exists. People don’t like commercials. This is partly the reason they like Hulu.

While it may seem counter-intuitive, therefore, the brand equity impact of Hulu on the multi-billion dollar equity value of giant television media franchises may be very positive right now, and may go negative the more its caregivers try and transform Hulu into television by introducing more commercial messages.

As a way around some of these problems and possibilities, one can get the sense from talking to online video enthusiasts that they are waiting for the day when 150 hours of viewing time exists without regard to platform, Internet or television, and where screens are connected and become one. This is the “Eventually-the-Internet-will-become-television” argument in which Internet video strategy simply docks with television and its $65 billion in advertising review. It says that traveling at the vaunted speed of Internet time returns us to the spot from which we left. It’s a boring outcome, it ought to seem, for new media, and a rotten one, too, for consumers in a consumer-driven world.

For now, perhaps it’s better to think of the three-hours of time per month that viewers online devote to video as brand-reinforcing time. Contrary to the idea that $3 billion in free programming online is destructive, it may be that it is terribly important to driving programming loyalty and repeated use offline, on television, and to supporting a $65 billion business despite the corrosive effects of fragmentation and commercial-skipping technology.

Once again, new media provides for older generations.

More online video logic.

More on the online video proposition, to go along with the earlier post in this space, from Avi Savar of Big Fuel today in ADOTAS. Says Avi,

“Donʼt make it an ad. If a video feels like an ad, viewers wonʼt share it unless itʼs truly amazing. However, if you give them content they want and find valuable, they are always willing to listen to your brand message. The key is integration of the brand message and how natural it feels to the content.”

And,

“And for how long the video needs to be, no more than 2-3 minutes depending on content. Or make it short: 15-30 seconds is ideal; break down long stories into bite-sized clips.”

May I add that I love the Big Fuel Communications URL, which is, Contenttocommerce.com.

Thinking about online video? Think short.

Recalling a post in this space last February, “Is Hulu like TV?”, Online Media Daily reported on new research that consumers do not use the Internet like television. Based on pretty good sample sizes, independent analyst, Bruce Leichtman, found that only 8% of respondents said they use the Internet to watch re-purposed TV shows. Most people watch video in smaller, short form segments online, whether news or sports or user-generated content. Ultimately, only 3% of adults said they would consider disconnecting their TV in favor of the Internet to watch their programs.

In juxtaposition to Mr. Leichtman’s research, the New York Times had a piece over the weekend on the astonishing online video trajectory of Susan Boyle, the homely “Britain’s Got Talent” performer that delivered a blow for the forces of goodness and light when she debuted on the show several weeks ago and became an extra-ordinary pop sensation. According to The Time’s report, her April video singing “I dreamed a dream” has been viewed 220 million times. Only three videos have ever received more clicks, says Visible Measures, a company quoted in the story.

These two stories should be viewed side-by-side. One says, look, I like TV for what it gives me: the chance to sit with my feet up and a bag of potato chips enjoying a program with my partner/children/roommate. During the commercials we talk about what everyone did that day. The other says, look, I like the Internet because without it I’d never have known about this Susan Boyle woman, and it made me glad to know that really good things still happen in life (without having to sift through days and weeks of programming). We can define the media experience of each in a variety of ways: one is passive and one is active; one is about shared experiences and one is about shared discoveries. Both cater to our social instincts. One is truly global.

But, they are different and will probably stay different because consumers will keep them for different uses. The frustrating part, of course, is that the advertising industry can’t decide how to take advantage of the Internet video piece – which is the 220 million views piece in the Susan Boyle example.

There are legitimate content rights issues in connection with opportunities such as Susan Boyle’s appearance on “Britain’s Got Talent.” We can’t help with that problem from here. But pretending that how the money gets divided does not remain an issue, what should the Internet industry do to position its particular brand of video opportunity?

Think short. Then, think big. The Internet is about segments and slices of content reached through countless entry points. YouTube and Hulu are successful aggregators of video content segments, but to create a viable ad model online video needs distribution. Distributing television style programming won’t scale and won’t cater to the uses and desires of the Internet audience. But delivering short form videos will: “How to” videos, such as home repair and recipes, movie trailers, TV excerpts, music videos, stupid pet tricks, etc.

It follows that with distribution will come context: video content will seek its own levels. With context will come the advertising rationale and – we hope – user acceptance of the associated ad models, such as pre-roll. The key is to make video prevalent online and sensible with regards to how people use the Internet, which is frequently in parts and segments.