How YouTube Morphed Into a Movie-Marketing Darling

In Just a Year, Google’s Video Site Has Become a Must-Buy for the Entertainment Business

NEW YORK (AdAge.com) — What a difference a year makes.
Twelve months ago, YouTube was trying to shake off its pariah status among all but the most risk-taking marketers. Today? Well, just try buying the home page.

Whether it ultimately becomes the profit machine Google hopes it will be — or perhaps just mildly profitable, as expected in 2010 — last year YouTube achieved something many thought it never would: It became a must-buy for entertainment marketers and an option for anyone trying to reach the younger demographic. That’s been helped along by Google, which has rolled out literally dozens of ways for large and small advertisers to use YouTube, from big homepage ads to pre-rolls and overlays, paid placements and search ads over the past 18 months. “When I took this job a year and a half ago, people kept asking ‘What is going to be the equivalent of the Google text ad for YouTube?'” said YouTube Ad Director Shishir Mehrotra. “What we realized is there is no one ad format for video, because consumers come to YouTube to do different things.”
The biggest evidence of the shift in market perception is YouTube’s home page itself, which was sold out in the fourth quarter, and is the subject of bidding wars among movie studios on Thursdays and Fridays to promote weekend openings.
Home-page takeovers
Lionsgate pioneered movie marketing on YouTube, and last year the rest of Hollywood grabbed the baton and started to run with it. Take “Avatar,” the Twentieth Century Fox picture with $150 million in marketing behind it, which bought the YouTube home page simultaneously in 15 countries, used the online channel to drive viewing of the trailer, and invited three vloggers to attend the red-carpet premiere in London and make videos about it.
Likewise, the Friday before Warner Bros.’ “Valentines Day” opened, New Line took the home page with an ad that allowed visitors to record and send a video valentine — perfect for the YouTube environment. Increasingly, the studios are using YouTube in lieu of building an online presence for each film.
YouTube not only gets in front of a valuable audience when they want to watch video, it also allows the studios to make sure a trailer is sampled through paid media, something a marketing microsite could never do.

YouTube views

“The days of the big ‘flashturbation’ site are over; now the studios want to go where the people are already at like YouTube, Facebook and Twitter,” said Justin Archer, VP-group creative director at Moxie, which did online marketing for “Avatar.” “The biggest marketing asset for any film is to show the trailer,” he said. “When anyone seeks out some sort of visual they begin their search at YouTube.”
Web celebrities
In a lot of ways, YouTube is today what MySpace was in 2006, in terms of its role for marketers, but it appears to be avoiding MySpace’s mistakes. When Google started adding big rich-media banners, as well as paid placements on the homepage, small producers and pundits fretted that it would kill off YouTube’s essential magic: the ability to allow content to surface from the most unlikely places. But unlike MySpace, increased commerce hasn’t diminished its appeal or its quirkiness.
Not only has YouTube kept growing, it’s also still manufacturing that curious species of YouTube “celebrity” such as Fred Figglehorn and Lisa Nova. Ever heard of Shay Carl or Ray William Johnson? They’re amateur comedians that each average more views than all the videos uploaded by CBS. Web-analytics firm TubeMogul says views for the top 25 vloggers grew more than 3% a month in 2009.
At the same time the number of video impressions that YouTube can sell to advertisers is growing quickly. Last week YouTube ad partners accounted for 44.7% of views among the top 100 videos compared to 36.3% six months ago. The more views generated by partners, the more revenue YouTube makes.
But YouTube is a key player in another building trend: the emergence of consumer brands as media companies themselves. As marketers increasingly produce their own video content, they are making it for YouTube, not for TV.
Adidas, for example, has a channel of videos that allow users to unlock challenges, watch from different angles, and play games. “Before you could just post something; now you have to put media behind it,” said Chris Murphy, head of marketing for Adidas U.S. Factoring in the creative expense and the cost of media to YouTube, it becomes more expensive than an equivalent TV campaign, but Mr. Murphy said you’re getting more than impressions. “It’s very participatory; you could never do that with traditional advertising spots,” he said.
YouTube hasn’t solved its problems with film and TV producers, but over the past year a mutual understanding with brands has bloomed. “Twelve months ago people were still trying to figure out what YouTube would do; the hype was over and reality started to set in,” said Andrea Kerr Redniss, a managing director at Publicis’ Optimedia who placed two branded campaigns for T-Mobile on the site over the past year. “I think they needed this turnaround to prove they could be a viable means for brands to communicate with consumers.”

BE FLEXIBLE
YouTube figured out that rather than one solution to video advertising, there are many.
BE HELPFUL
YouTube once had a reputation for being difficult to work with. Now it listens and provides solutions to brands.
PLAY TO YOUR STRENGTHS Entertainment marketers were the first to embrace YouTube, so the company ran with it and created home-page units and promoted videos the studios love.
AUDIENCE FIRST
As eager as YouTube was to get brand dollars, it wasn’t willing to compromise on user experience. The result: YouTube is still the place unknown videographers can take on CBS.

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Publishers Should Create ‘Toll Gate’ For Premium Content

by Laurie Sullivan, Yesterday, 10:54 PM

Wouldn’t it be a tragedy if the Internet was the cause of the demise of excellent content? David Moore, 24/7 Real Media founder and IAB board of directors chairman, posed the question to attendees during his opening remarks at the IAB Annual Leadership Meeting 2010 on Sunday night in Carlsbad, Calif.
The digital premium content model is broken and advertising alone cannot support the cost of premium content, according to Moore, who laid out several predictions that will change online advertising forever.
The answer to charge sounds simple — but it’s not easy to implement, he says. With the mantra that totally free content is a thing of the past, Moore described a pay model that would require all premium publishers to cooperate.
Publishers are afraid to charge people for their content. No one publisher wants to become the first to charge. Moore suggests that the industry needs to collectively establish a toll gate for content — an EZ Pass entrance that allows people to access preferred content at any site. Publishers would charge 10 cents per session or one penny per page, Moore says, citing a recent Nielsen survey that suggests that 52% of consumers would not object to a business model built on micropayments.
Publishers wouldn’t charge consumers until subscriptions reached $10. “One user session at 10 cents equals $100 cost per thousands,” Moore says. “Who’s getting advertising rates like that today?”
This long-term strategy will enable the strong to survive because premium content needs to find a way to become profitable if everyone implements this “easy pay program” together, Moore says.
Prediction No. 3 turned to more precise audience targeting, which has been the promise of advertising for years. “In the old days when cable cost $6 per month we imagined a world where men didn’t see ads for tampons, and women didn’t have to watch ads for a jock itch remedy,” he says.
Moore realizes that some people are “freaked out” that advertisers watch their behavior online, but once people realize their Web experience is “guided by their habits and preferences, it will seem a lot less freaky.” He referred to audience targeting as one step away from the recommendation of a friend that will increase the ability for publishers to charge higher prices for content.
“Blocking our ability to target ads is bad for business and for the people who use the Internet,” Moore says.
Moore also predicts that digital advertising will become the largest media market in the world within five years, with video advertising becoming the dominant format. For this to happen, the industry will need to develop better standard measurements, simplify the workflow that makes advertising easier for companies to buy, and find new ways to display ads to consumers. He also told IAB attendees the advertising industry has become much too nice, and companies need to stop being afraid to interrupt the consumers with ads. “Why are we so afraid to disrupt the user experience?” he says. “We’re in advertising.”
Moore says the new consumer online experience requires advertisers to become more disruptive — but do it with targeted ads.

Apple Sets Out to Reinvent Mobile Ads

n Wake of Quattro Deal, CEO Jobs Looks to Make Mobile Ads ‘Suck’ Less

NEW YORK (AdAge.com) — With the iPhone, Apple changed the face of mobile devices. Can it do the same for mobile advertising?

CEO Steve Jobs is reported to have said, “Mobile ads suck,” and in the wake of its purchase of mobile ad network Quattro, all signs point to Apple exerting its considerable clout on the mobile web to make the ads, well, better. “Static banners aren’t very Apple,” said Krishna Subramanian, co-founder of mobile ad exchange Mobclix. But one question is reverberating around the industry: Will Apple use its dominance to squeeze out other so-called premium ad providers?
Taking control
Last week Apple showed it won’t be shy about setting new standards. In a blog post, the company warned developers that it will reject apps that serve users location-targeted ads. “If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store,” the post said.
Location-based ads are often the most attractive for advertisers looking to drive foot traffic into stores. “If I’m looking at my phone, I want to see an ad for the restaurant around the corner, not for something without context,” said Michael Becker, Mobile Marketing Association’s managing director, North America. “Situational relevance for mobile users — and for marketers — is essential.”
Apple claims the controversial post was only intended to protect user experience. Regardless, to some, this move looks like a preview of what Apple has planned for its new ad network. It has been building out a global sales team, and Quattro CEO Andy Miller is Apple’s first VP-mobile advertising, reporting directly to Mr. Jobs. It’s the first time Apple has been in the ad business, and this move indicates how seriously the Cupertino, Calif.-based company takes it.
“Clearly, Apple is going to do everything it can to redefine mobile advertising,” said Eric Litman, chairman-CEO of ad network Medialets, who also said he sees merit in Apple’s defense of users in its location-based ad restriction. “Obviously they’re going to want to leverage unique capabilities of their device as an advantage to them and not their competitors.”
Restricting competition?
How would that happen? Since all applications must go through a stringent approval process before hitting the App Store, Apple could reject apps with non-Quattro ad network code. But restricting outside ad networks would also mean cutting into developers’ profits, because many already partner with multiple networks to monetize their apps.
It is also likely that Apple will integrate Quattro into its software development kit, giving developers a default ad network that’s built into the app toolbox. With an already embedded ad network, developers would have an automatic revenue stream on approved apps, and would then have to contract networks beyond, or instead of, Quattro.
The iPhone claims about 25% U.S. smartphone market share as of December, according to ComScore. An Apple spokeswoman declined to speak directly about plans for Quattro or Apple’s position on mobile advertising.
Apple has cast the deal as a way to make money for the developers whose apps have made the iPhone popular. Right now, Apple reaps 30% from music and paid app downloads and, like the existing mobile ad network model, could take a fee for passing ad sales on to developers.
Redefining mobile ads
Developers could also stand to benefit from Apple meddling in mobile ad formats — better ads could mean better results, happier clients and, eventually, more money. With Apple’s characteristic design and usability expertise, it could reinvigorate the ad category so mobile doesn’t get stuck in the same banner doldrums as its interactive predecessor, online advertising.
“There’s no doubt that Apple will add functionality around advertising,” said Mike Sanford, president-CEO FlipSide 5, a developer whose apps, including Touch Hockey, have been downloaded 26 million times.
Mr. Sanford said the current purchasing experience on iPhones is clunky. But with a mobile ad network backed up to the phone’s operating system and the almighty iTunes, Apple could work some of those kinks could out. Imagine ads that click-to-buy to iTunes, a purchase platform consumers already use and trust with their credit card information.
“People might be hesitant to tap credit card information into their phone,” said Mobclix co-founder Sunil Verma, citing the ESPN’s app. “But they’re already used to buying games on iTunes.”

Veoh Plans to Liquidate

Veoh Networks Inc., a video-sharing Web site backed by high-profile investors, said on Thursday it is closing and would liquidate under bankruptcy protection.
“The distraction of the legal battles, and the challenges of the broader macro-economic climate have led to our Chapter 7 bankruptcy,” Dmitry Shapiro, the company’s founder and chief executive, wrote on his personal site. “This chapter of our lives has come to an end.”
A spokesperson for Veoh didn’t immediately return a call seeking comment.
The closure was earlier reported by the All Things Digital blog, which is owned by News Corp., which also publishes The Wall Street Journal.
San Diego-based Veoh, founded in 2004, was one of many promising video-sharing start-ups and attracted funding from a host of well-heeled investors. Those included the venture-capital operations of Goldman Sachs Group Inc., Time Warner Inc., and Intel Corp. Veoh also received funding from Tornante Co., Michael Eisner’s investment vehicle.
The site, which had tried for years to carve out a niche by offering both user-generated content and professional shows, was eclipsed by rivals like Google Inc.’s YouTube and Apple Inc.’s iTunes. Veoh said it attracted more than 28 million unique users per month world-wide.
Veoh’s shutdown comes despite a ruling in September that handed it a victory in a closely watched legal battle with Vivendi SA’s Universal Music Group.
The music label had accused Veoh of infringing on its copyrights by distributing online videos that featured music from its artists, but a federal judge ruled the Digital Millennium Copyright Act protected Veoh.

Synacor connects 14 cable operators with NBCU’s Olympic coverage

By Mike Robuck
CedMagazine.com – February 11, 2010 Synacor’s entitlement platform will get a work out when it enables NBC Universal’s 2010 Winter Olympics broadband coverage with 14 cable operators.
The Vancouver Winter Olympics are slated to start tomorrow and run through Feb. 28. NBC Universal (NBCU) is offering additional coverage through its “Olympics Online Connect” effort on NBCOlympics.com
Fourteen cable system operators will use Synacor’s offerings to provide their customers access to Olympics Online Connect, where their video subscribers can watch exclusive Olympic Winter Games coverage on NBCOlympics.com.
Specifically, Synacor will serve as a single integration point between NBC Universal and the cable operators in order to provide the video subscribers access to more than 1,000 hours of NBC’s coverage of event competition on NBCOlympics.com, including more than 300 hours of live events and more than 400 hours of on-demand-encore replays.
Operators working with Synacor include Charter, WOW!, Armstrong, Blue Ridge Communications, HickoryTech Corporation, Bend Broadband, Midcontinent Communications, Suddenlink Communications, Atlantic Broadband, Mediacom, GVTC Communications, Knology, Grande Communications and NewWave Communications.
Synacor estimated that it would be working with more than 9 million cable customers during the Olympics Online Connect coverage.
“NBC’s Olympics Online Connect  is a great example of the media industry coming together to distribute high quality content online,” said Ron Frankel, president and CEO of Synacor Click here! <!–if ((!document.images && navigator.userAgent.indexOf('Mozilla/2.') >= 0) || (navigator.userAgent.indexOf("WebTV") >= 0))document.write('

ESPN Plays Up the Web

Sports Network Adding Features to Expand Distribution, Viewers

In a high-profile push to make money from online video, sports broadcaster ESPN is putting new muscle into a Web site that shows live events for paying subscribers.
ESPN, a unit of Walt Disney Co., is planning a new marketing campaign and new interactive features for its ESPN360.com site, which it plans to rename ESPN3.com in early April. The launch coincides with the start of the baseball season, with the Yankees-Red Sox opener to be streamed live on the site.
In an effort to broaden the site’s audience, ESPN has also been in talks with television distributors and Internet providers to make it available to more customers. A person familiar with the matter said ESPN has had preliminary conversations with technology companies about making the service available on devices such as Web-enabled TVs or gaming consoles.

Getty Images

ESPN360.com drew 91,000 viewers during a Sept. USC game.

ESPN360 is a subscription Web site offering live video of a wide array of sports. It doesn’t require a separate fee; rather, it comes bundled with the Internet service from a participating provider, such as Verizon Communication’s Inc. Distributors pay ESPN for it based on their number of subscribers, similar to the way they pay to carry ad-supported cable-TV networks.
Available in about 50 million homes, it draws a small but growing audience. One night, at the outset of college football season in September, ESPN360 averaged about 91,000 concurrent viewers over multiple games, the company says. That’s still well under the millions who watch regular events on ESPN itself, though.
Increasing ESPN360’s popularity is “critical to our future,” said Sean Bratches, ESPN’s head of sales and marketing. “We don’t say, ‘This is on the Internet,’ or, ‘This is on television.’ We look at it as a network.”
ESPN’s Web service, which has existed in its current form since 2007, is one of several major efforts to tie subscription fees to online video, as cable operators and media firms worry Web video could lead viewers to cut cable-TV subscriptions.
Comcast Corp., Time Warner Cable Inc. and Verizon are each working on Web services that would make cable-network shows available online, but only to paying TV subscribers. But executives at several media companies believe they should be paid extra to include their content, with some pointing to ESPN360 as a model.
ESPN has taken an unusual approach in trying to expand ESPN360: It has been willing to pull back one of its traditional cable channels. In talks with distributors, it has proposed reducing the number of homes receiving ESPN Classic, a smaller cable channel, in return for carrying some combination of ESPN360 and newer college sports network ESPNU and Spanish language network ESPN Deportes.
ESPN Classic is now in 58 million homes, down from 64 million in September, according to ESPN. Meanwhile, ESPN360 penetration has doubled in the last year.

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The marketing push for the new ESPN3 name will include advertising both on and off the company’s cable networks. The site’s new features will include real-time statistics and fantasy games tied to some events.
“We want to take the best of the Web and take it to a TV-like environment,” said Damon Phillips, vice president of ESPN360.
One of the biggest holdouts among potential distributors is Time Warner Cable, the second largest cable operator in the U.S., by subscribers. “The content certainly has an appeal to sports fans,” said Maureen Huff, a Time Warner Cable spokeswoman. But she added that “Our customers ought to be able to access the Internet without being forced to pay for programming that they might never watch.”
ESPN, in response, said the site’s business model allows it to show events that “would not otherwise be seen.”
About 17.5% of content on ESPN and ESPN2 is simulcast on ESPN360 but the percentage of sports events is higher. All World Cup soccer matches on ESPN and ESPN2 this summer will be available on the site.
Mr. Bratches played down the danger that viewers would ditch their cable TV, from which ESPN reaped an estimated $5.8 billion in 2009 fees, according to market researcher SNL Kagan.
“We look at it as being additive,” Mr. Bratches said, noting that ESPN360 is popular when people are at work. “The consumer is going to use the best available screen.”
Write to Sam Schechner at sam.schechner@wsj.com

Element of Choice Draws In Online Viewers

Aiming to wrest more advertising revenue from online video, several companies, led by ad giant Publicis Groupe and including Microsoft, Yahoo, CBS and Hulu, have spent the past year testing online-ad formats to figure out what consumers want.
It turns out they want choice.
Tests found that “ad selector,” a format that lets online-video watchers pick one of three companies’ ads to watch, outscored other ad formats, including the much-maligned “pre-roll” ads that consumers are often required to see before viewing online video clips.

[ADSELECT2] Publicis Groupe

‘Ad selector,’ a Web-video ad format that lets consumers pick one of three commercials to watch.

The new research shows that consumers are likelier to watch and recall an ad that they choose than one that is forced on them. “Having to select an ad makes consumers more engaged,” says Beth Uyenco, global research director of Microsoft’s advertising and publisher solutions group.
All told, the ad selector beat out about 30 ad formats now being used by the media companies that participated in the study. That includes interactive online video ads, which drop down over the video screen and allow viewers to click for more information; clickable videos, which let viewers click on hot spots within the video itself to learn more about a product; and “skins,” or ad graphics that surround the video-player screen.
The research was designed by Vivaki, a unit of Paris-based Publicis that buys hundreds of millions of dollars of online ad space annually for clients such as Procter & Gamble, Coca-Cola and Wal-Mart Stores.
Ad spending on Web video has been damped in part by the many competing video-ad formats, media companies and advertisers say. Advertisers say having to create different types of ads for different sites boosts production costs, and they have long complained that they spend too much time and resources on re-sizing ads.
The lack of standardization has created “a reluctance to shift more money into online video,” says Jean-Paul Colaco, senior vice president for advertising at Hulu, an online-video site jointly owned by Walt Disney, General Electric‘s NBC Universal and News Corp., which also owns The Wall Street Journal.
There are greater “cost implications” for the production of online-video ads than with TV and radio advertising, says Nancy Ryan, media director for Allstate Insurance Co. The Allstate unit was one of six marketers, including DineEquity‘s Applebee’s Neighborhood Grill & Bar, Capital One Financial and Nestlé‘s Nestle Purina PetCare, that participated in the research, along with two well-known advertisers that declined to be identified.

[ADVERT] TK tk

Video ads are among the fastest-growing parts of online advertising. U.S. spending on such ads is expected to grow by 40% this year to $1.4 billion, says research firm eMarketer. Consumers spent an average of 193.2 minutes watching online video in December, up 13% from a year earlier, according to Nielsen.
But online video is still a small part of the broader advertising landscape. Marketers, for example, spent about $66 billion in the U.S. on TV ads in 2008, according to a research firm owned by ad-holding company WPP. Media companies say video could be drawing many more ad dollars than it is.
Media companies are also eager to find an alternative to pre-roll ads, which put off many Web surfers enough to abandon a video before it plays.
Despite that problem, pre-roll ads have become the closest thing to an industry standard; they are easy for marketers to create, because they are often essentially TV ads applied to a new purpose.
The ad selector began as a format created by Hulu. It was then reworked by the companies involved in the project to include ads from three different brands, rather than three different versions of an ad from one company. Competing brands won’t appear together. If a Web user doesn’t click on one of the ads, the host company’s ad server will chose one at random. The advertiser isn’t charged if his ad isn’t downloaded.
The ad-selector format was tested against pre-roll ads for almost two months on a handful of Web sites, including CBS.com and Discover.com. Click-through rate for the format—the proportion of viewers who clicked through to the advertisers’ site—were more than double that for standard pre-roll ads. Consumers were twice as likely to remember what company the ad was for after watching the ad they had chosen.
Media companies say coming up with an ad format offered across many Web sites will help them better measure an ad’s effectiveness, something marketers are increasingly clamoring for as they move more ad dollars to the Web.
“Online ads will never have the massive reach of a 30-second spot on ‘American Idol,’ but Web ads can give you better awareness and impact,” Microsoft’s Ms. Uyenco says.
Enshrining the ad selector as the default format for online-video ads would take time. To help it stick, Vivaki is pitching the format to all its clients and hopes to have “tens of millions” of ad dollars to buy this type of ad, says Tracey Scheppach, Vivaki’s innovations director.
Nestlé Purina has signed on. “It is definitely a model that warrants investment,” said Michael Crawford, its vice president of consumer communications and insights, in a statement. The company declined to disclose how much it will spend on the format.
CBS Interactive says it will begin using the new format in the second quarter, while MSNBC.com, the Web site owned jointly owned by Microsoft and General Electric’s NBC, says it will roll out ad selector soon. MSNBC.com has two large brands seeking to use the format, says Moritz Loew, senior director of national sales for its digital network.
Write to Suzanne Vranica at suzanne.vranica@wsj.com