Turning online services into revenue

As with many new technologies, the novelty of streaming television content created the push for broadcasters to develop their online presence without much heed to their ROI. As the industry matures, there is growing evidence that streaming media can be a profitable arm of a broadcaster's business model. This is in part due to the audience's tolerance for advertising and pay-per-view services. It is also in part to the sophistication of ad insertion and tracking mechanisms that have developed over the past five years.

Figure 1. An example of a streaming content playlist. Click here to see an enlarged diagram.

The effectiveness of online advertising

In today's market, streaming media capitalizes on the prevalence of broadband connections and the tech-savvy consumers who use them. CBS SportsLine reported record-breaking online coverage of March Madness, delivering more than 19 million video streams over the course of the playoffs. In addition, it reported an average viewing time of more than two hours during its broadcast of the Masters golf tournament. (See “Web links” on page 51.) Large audiences glued to computer screens rather than television sets can certainly justify some investment in advertisers' dollars.

Businesses may also be more willing to pay for online advertising because their audiences have learned to respond more positively to these promotions. A recent study by the Online Publisher's Association shows that 31 percent of online viewers have clicked through to Web sites making online offers during a streaming media presentation, and 8 percent actually made purchases as a part of these actions. (See “Web links” on page 51.)

The advantage, of course, is that this direct impact on the business' ROI is measurable and trackable, which can be an even greater advantage than over-the-air advertising. While these behaviors are relatively new, and the advertisers are understandably wary of the new technology, the trend may be that online advertising can exceed revenues from traditional channels in the future.

Types of online advertising

Online advertising, in the form of banner ads, pop-ups and sponsored links, has a clear presence in the Web environment. Banners and links can use animated GIFs or Flash to catch viewers' attention and may be more effective than pop-ups because they are not subject to pop-up blockers that exist today.

New developments in Flash technology allow video to be incorporated into banners, as well as be integrated into a video stream using pre-roll, post-roll or interstitial ads within a program. While many content providers are still trying to fit into a broadcast model using 30-second or one-minute ads, this new technology lends itself to more flexible approaches that can capture a viewer's attention in much less time — even in odd increments.

The online audience is no longer in a sit-back-and-be-entertained mode, so repurposing television ads may not be the most effective means for broadcasters to reach viewers and hold onto their advertising dollars. Several companies offering ad insertion services use rollover interaction that will expand the video window and allow viewers to become more engaged in the advertisement without clicking through and leaving their original source.

Tracking online user behavior

Tracking online user behavior can be a major boon to the online advertising community. Web logs can determine how much of a stream is watched, or whether a banner ad or sponsored link initiated a click-through by the viewer, giving advertisers more assurance that their message is effective. Sites also offer sweepstakes to collect user demographics and data for mailing lists that can be an additional source of revenue.

Microtargeting, or tracking specific users' behavior and targeting ads catering to their particular interests, is used today for specific product showcases, such as Amazon.com, and usually gets end-user consent as members register to a site. While privacy concerns abound, individual tracking and demographic targeting for more effective advertising certainly lends itself to the personal nature of Internet delivery.

Development platforms

Flash has been the primary development platform for streaming advertisements, though much of the same functionality can be achieved in Microsoft's Windows Media or Real formats using SMIL or ASX. Originally from Macromedia, which was recently purchased by Adobe, Flash's success has been its ubiquitous nature in cross-platform delivery environments, claiming installation on 98 percent of all desktop computers. The most recent improvements to Flash video, including integration of On2's Truemotion VP6 codec, allow true ad insertion and full control over a browser page even as the video is playing. But this requires the use of Flash 8. Fortunately, automatic updates allow end users to easily install newer versions, making the experience more seamless than in the past.

Broadcasters can invest in Flash development resources or rely on several outside companies to create products and services for the interactive, flexible content required for ad insertion. For true integration with streaming content, playlists consisting of a series of program segments are created using XML and then delivered with the ads interspersed. Some programs may be more suited to the use of specific ads, or a more sophisticated approach can rotate ads as a user views multiple playlist items. (See Figure 1 on page 48.) Flash is ideal for this because it is an object-based programming environment, allowing authors to create reusable components for their Web site deliverables.

For streaming media delivery, Flash also has numerous tools for controlling the entire Web site environment. Flash 8 introduces several new components for customizing skins, or player applications that embed the video directly in the Web site, keeping viewers focused on the entire message rather than being distracted with pop-up windows. Cues can be embedded into a Flash video stream to control the content appearing on the page as well. So, for instance, as a user selects a particular video to watch within a playlist, not only can a streaming ad be played, but a static banner can also be customized to his or her particular interests. Targeted ads such as these can draw a higher rate of return to the sponsor and therefore attract more advertising dollars to the broadcaster.

Prior to its latest incarnation, Flash video encoding relied on an older standard based on H.263. It had a reputation for lower quality and required higher bit rates to achieve the quality of other proprietary formats, such as Real and Windows Media.

Recently, On2's VP6 codec has proven to be a competitive technology for encoding various types of content in addition to including support for alpha channels useful for green screening. (See “Web links.”) On2 offers the Flix video encoder tool to create Flash video from the original source, as well as a QuickTime exporter plug-in that can be purchased to run in any QuickTime video production tool, such as Apple's Final Cut Pro or Adobe Premiere.

In-house development of ad insertion technology requires a fairly substantial investment in Flash and Web development resources. Efficient delivery that takes advantage of these technologies also requires the Flash Communicator server for proper communications and streaming to the end user. Companies offering these specialized services can handle both creation and delivery.

As this industry grows, we will see more embedded advertisements, product placements and hot spots within the video stream itself. This will come as the technologies for content creation, including Flash and MPEG-4, mature. And they likely will be more common with video that is created exclusively for online audiences — unless we see a push for more interactive television in the future.

Barb Roeder is a consultant and president of BarbWired (www.barb-wired.net).

Web links

CBS SportsLine

Online Publisher's Association

“Proprietary codec 2006: Choosing and using the optimal video codec”