Internet video platforms to win competition for incremental ad revenue, says the Yankee Group

May 13, 2008

IPTV operators and cable will lose out to Internet video platforms in the competition for the incremental ad revenue supporting investments in interactive television due to a significant shift taking place in the advertising industry, according to the Yankee Group.

By the time cable and IPTV operators are able to deliver interactivity to a large number of households, content owners and advertisers will have already made long-term interactive platform investments online.

According to the recently published Yankee Group report, “The High-Water Mark for Interactive Cable,” digital and interactive advertising is the cornerstone for the infrastructure investments needed to support interactive programming. Cable networks will continue to command large linear audiences and above-the-line advertising revenue, but cable operators will be limited in their ability to deliver interactive experiences that can compete with Internet video.

As Internet video becomes the predominant platform for interactive television, cable and IPTV operators have many opportunities to grow their advertising revenue by as much as $3.8 billion in the United States by 2012. Both programming and advertising will become more focused and viewer-driven, and content owners will develop media brands and viewer relationships, measuring campaign performance by the viewer click. Targeting and digital ad insertion technologies in linear and on-demand programming will drive television advertising revenue from nontraditional television budgets, including local and direct response.

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