Networks Get the Net
TV's online surprise: Shows on the Web build audiences and lure advertisers
Connections. If eyeballs are the currency of the broadcast world, engagement is rapidly becoming the currency of the online one. "This is a very passionate community," says Erin Dailey, who covers Heroes for the online site TelevisionWithoutPity.com. "Even things that have no meaning have meaning to them. [Fans] can't go a day without knowing what's going on." That connection sometimes spills over to the show's advertising. When Nissan used Heroes to introduce its new Versa, discussions about the car showed up on TWOP's chat boards.
"The networks believe that they can charge a premium for people who are coming to the Web, because they have sought out the content actively and they are engaged mentally," says McQuivey. "They believe that those people will have a more profound relationship with advertisers."
Apparently, so do advertisers. At the moment, demand for commercial time on the Internet is much greater than the supply, and the time is selling for CPMs (cost per thousand viewers) equal to or sometimes higher than those for prime time, where CPM for a top-rated show can hit $25. Although online audiences are smaller, they are easier to target and reach, and they are more likely to drill down into an ad that interests them. In addition, there are fewer online ads overall, and they cannot be zapped.
Online audiences also tend to be younger, more affluent, and more male than TV viewers, giving advertisers access to the increasingly elusive and desirable 18-to-34-year-old crowd. For networks like CBS, which tends to attract older viewers, the Internet is especially appealing. And perhaps most important, after years of putting up with television's less-than-ideal measurement methods, online advertisers can turn to the Web for accurate and immediate numbers. They know down to the click how many people are seeing their ads, along with their demographics, how many are seeking more information, and how long they are spending in the ad bubble.
"The big question now is what do you charge for online ads and how much money can you make from them?" says David Poltrack, chief research officer for CBS Corp. "There is a lot of research being done to gauge the impact of a TV commercial presented on the Internet, as opposed to one on TV, but we're not there yet."
The potential for profits becomes even greater as the networks create more short-form content, which is the most popular type of Internet material and could become an online ATM. Rather than sell a "pre roll," a "post roll," and a few shorter ads around an entire episode of Late Show With David Letterman, for instance, CBS can sell the show a la carte. That way, the monologue, top 10 list, and musical guest can all be presented as separate clips with their own advertising. Breaking shows into bite-size pieces also makes sampling more attractive and creates more opportunities to direct traffic back to the network, where a viewer who saw an ad attached to an online clip from House can see the same ad again during the full broadcast on television.
With all this change, one thing that will remain the same is the power of good content. "There's a huge demand for high-quality content," says Sasa Zorovic, an analyst with Oppenheimer & Co. "Yes, people want to watch Sasa Zorovic's little video, but they are a lot more interested in professionally produced content." And as clichéd as it is, if content is king, the networks remain in control of the kingdom. "Eighty percent of the advertising money will flow to the 10 or 20 percent of the best online content," says Ozguc. "The hit shows, the things that draw repeat audiences and create loyal followings, will win out, just like they do on TV. "
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