Digital Video Overview

What Every Marketer Should Know December 2008

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Agenda
• Address the New Model • Define the Options • Understand the Audience • Review the Video Content • Results • Implications & Best Practices

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The New(er) Model: On-Demand

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New Reality

Consumers have more control

We must move from exposure to ENGAGEMENT
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Milestones: Game Changing Events in Online Video
The Slingbox allows you to watch your home TV on any Internet-enabled device. Relaunches in 2006 as a video-sharing site, a la YouTube Web video content migrates to TV

Initial launch of Yahoo! Video 5/05 6/05 Nielsen adds VOD to their ratings iTunes 4.8 offers video 10/05

YouTube limits video clips to 10 mins in order to combat piracy. Users respond by breaking episodic content into segmented clips.

TiVo offers Internet video service, featuring content from the NYT, NBA, and iVillage.

3/06

4/06 First ever non-traditional platform Emmy awarded to Live 8 on AOL.

6/06

Apple sells TV shows for $1.99 (ABC/Disney)

Users buzz about a the future possibility of a videoenabled iPod

1,000,000 videos sold in first 12 days

"This throws the shackles off of the definition of what TV has been." –Tom O’Neil, author of book “The Emmys”

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The Old Way of TV Distribution

CONTENT 2004
a. New Programs b. Syndication

DISTRIBUTION
a. Networks & Affiliates

DEVICE

b. Cable Networks & MSO

TV w/ DVR or VCR

Fewer choices for content Scheduled Linear Distributor-Centric

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The New Way… IP Delivered, On-Demand
CONTENT
a. New Programs b. Syndication c. Game Industry d. Movie Industry e. Music Industry f. General Publishers g. Consumer-generated a. b. c. d. e. f. g.

DISTRIBUTION
Online – iTunes Online – Aggregator Online – ISP’s Mobile Networked distribution Wireless data system Direct to consumer

DEVICE
a. b. c. d. e. f. TV w/ DVR Networked TV Computer Cell Phone PSP iPod

2008

Unlimited content choice Multiple distributors On demand Consumer-Centric
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The State of Television Today:

Jim Stengel, CMO, P&G:

– While the average US household has 96.4 TV channel choices, the average viewer watches only 15.4* – Ad clutter has increased18-49 “In 1965, 80% of – –

year-olds in the US could be Ratings have dropped reached with three 60-second TV spots. In 2002, it Fewer than 10% of consumers say that required 117 prime-time television ads influence their purchase decisions** the same.” commercials to do

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Source: *Nielsen Media Research, 2006 **Forrester Research, 2006

Multi-Platform Messaging
• The TV360 model surrounds consumers with your brand in two highly complementary environments

Television Provides:       Unparalleled reach Broad scale Deep inventory One-way, multi-touch consumer relationship Large screen, high-quality messaging Viewer loyalty & engagement

Digital Video Adds:

+

      

Lean-forward environment Direct link to brand, continuing consumer conversation Uncluttered, yet limited inventory One-to-one consumer relationship Video + interactivity & custom creative elements Real-time campaign performance, opportunity to track & optimize Additional engagement—users virally sharing great content with friends

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The US Ranking

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Spend Projections

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Defining the Digital Video Options

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What is Digital Video?
• IP-delivered video content – Through the internet – Potentially compatible with a range of devices – On-demand – Degrees of interactivity Majority of online video made up of – In-stream Video – In-banner video

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What is In-Stream Video?
• • An online streaming video experience similar to linear TV models that can offer Pre-roll creative runs prior to user requested content
– Also available in mid-roll and post roll format

15 OR 30 SECOND SPOT

Coupled with a companion ad unit (standard or rich media banner) that adds interactive functionality Commercial cannot be fast forwarded Sold on impressions, not GRPs Commercials run one per pod

• • •

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What is In-Banner Video?
• Full motion video advertisement • Ad plays unobtrusively until clicked on/sound enabled • Can use existing creative • Expandable viewing window • DR capabilities/clickable for more information/retail locations/calls to action • Interstitial ads: Commercial video appears in same browser window between web page loads

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A Handy Reference

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Advertising Examples

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Advertising Examples

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A Hyper-fragmented Video Landscape
Only 50% of streams come from top 10 sites 28% of the views come from YouTube

Sources: ComScore 11/30/07 Press Release, Willvideoforfood.com
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In-Stream Video: Pros/Cons
Pros
• • • • • • • Extends TV reach and ability to penetrate atwork audience Reaches captive audience awaiting desired content Like TV, delivers impact with sight, sound and motion Clutter free environment Allows for higher composition media buy (where available) Allows for interactivity via companion units Delivers measurable results • • • • • • • • • • •

Cons
It’s still just a commercial Limited targeting (compared to other online tactics) Inventory is limited Costly CPMS 3rd party ad serving not always supported Video Ad length effectiveness not well understood Reporting discrepancies Online buying not similar to TV buying Many different video ad products available Different video player technologies Attribution of metrics and viewers

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Marketing Opportunities

Industry Examples

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Marketing Opportunities: Tiered Levels of Involvement

Like most other forms of advertising marketers can participate at varying levels within online video marketing Low Involvement
• “Traditional” advertising within Video Sites (i.e. banners, logo placement) • In-Video Overlays (small ad banner that pops up on bottom of video player while content plays)

Medium Involvement
• Exclusive internet produced spots to be included in ad campaign or seeded within video sites • Includes pre-roll placement • Relevant or irreverent (viral) content is encouraged

High Involvement
• Content creation– create //content that lives in Los Angeles New York San Francisco USA Atlanta Boston Chicago Dallas specific branded

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Low Involvement
Adobe’s sponsors Metacafe’s Director’s Cut
Adobe sponsored a featured channel produced by Metacafe, showcasing original video that honors the craft of filmmaking. Sponsorship includes call out on features section on homepage, logo sponsorship with in Director’s Cut Channel, co branded media throughout the site.

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Medium Involvement
Pfizer Consumer Healthcare
Purchased pre-roll video inventory before quality video content on top sites which scored high among the target audiences and were contextually relevant Furthered the broadband video experience by expanding PCH’s brand messages to an interactive companion banner that provided the user with valuable product information, games, coupons, etc.

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High Involvement
Schick: Girl’s Guide to Dating

A custom microsite was built for Schick Quattro for Women by Match.com in conjunction with Schick’s creative agency and Carat • Match.com hired an actress and to play the role of ‘Juliette’ – a Dating Guide and filmed her giving tips (scripted in advance with Schick’s approval) • The role of ‘Juliette’ in the Girls Guide to Dating microsite was to make navigating the site fun and to provide a human element throughout the microsite • ‘Juliette’ was present across the website and gave users Dating Advice, First Date Tips, and Tips on Relationships • In addition to this, other videos were present such as: humorous dating scenarios with Juliette interjecting and providing advice • In its first month, this site received 3.8MM hits

visit www.girlsguidetodating.c
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TV360
(TV + Online)

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TV360 | Benefits

• Incremental Reach
Adding Online to a TV program delivers a whole new set of highly engaged consumers

      +    

• Segmenting the Funnel
Television’s broad reach fills the marketing funnel and Online’s targeting and interactivity push consumers through to purchase

• Enhanced Results
Adding Online increases brand metrics lift by 15-45%

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TV 360 | Example

Video Broadcast + .com + Streams

+ Syndication + Partners

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Internet Dominates the Purchase Process

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Understanding the Audience
Who’s watching this stuff anyway?

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BB Access at Critical Mass

Broadband Users: Home
(millions)

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The Broadband Effect
• Time spent online increases dramatically for broadband users • Broadband users are much more likely to bank online, and to research financial products and services online
Time Spent Online

10.7
hours

12.4
hours hours

15.8
hours

15.7
hours

7.5

hours

7.6

hours

9.1

hours

8.1

W18-49

W25-54
Dial-up

M18-49
Broadband

M25-54

Source: Knowledge Networks, Inc., MediaScan Fall 2002

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The Raw Numbers
Online video viewing has reached its tipping point • 62% (114 MM) of Online Users are viewing Expected to increase 86.6% (183MM) by 2011 online video Over 40% watch online videos, at least, on a 24% watch several times a week weekly basis
Currently, Men slightly outnumber Women, 71% to 64%
Young affluent men are the most frequent online video viewers

Viewers 28-34 are the most “active” online video viewers Popular activities include creating and posting content

$410 MM spent on US online video advertising in 2006 Reached 47% (88 MM) online video viewers

Source: eMarketer, August 2007 “Online Video: Making Content Pay”

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Internet Video Continues To Grow
Internet Users and Percent Who Stream

Source: comScore Video Metrix, April 2007, U.S. Audience

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In-Stream Video Audience is Diverse too

Source: Arbitron/Edison Media research Internet and Multimedia 2005: the on-Demand Media Consumer USA // Atlanta Boston Chicago

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Viewing Frequency

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Internet Video “Primetime” Is Actually Early Fringe
Average Number of Streamers – By Weekday Hour and Audience

Source: comScore Video Metrix, April 2007, U.S. Audience

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Why They Watch

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Consumer Tolerance
Overall consumers accept that advertising is a fair way for publishers to supplement costs and offer free content

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Consumers watch on average 19 sec of a 30 sec video, and 10 sec of a 15 sec video
Video View Time (seconds) Video View Time by Vertical for 30 sec & 15 sec videos
21.4 18.5 19.1

Benchmarking: Consumers View 63%+ of a Video Ad Message

9.8

10.3

Entertainment Video View Time 30 sec

Consumer

Overall Video View Time 15 sec

Source: DoubleClick Rich Media and Video (Klipmart) campaign benchmarks, 30 and 15 second ads only, JuneSept. 2006 USA // Atlanta Boston Chicago Dallas Los Angeles New York San Francisco

The “Engaged Viewer”

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The “Engaged Viewer”

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The “Engaged Viewer”

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Reviewing the Content
What are they watching?

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What Type of Video Content is Accessible?
Since early 2005, broadband video inventory has exploded
Inventory available on leading news, health, lifestyle, and entertainment sites

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Four Types of Content

• Repurposed Content • Original Content • Syndicated Content • User-Generated Content

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What is Everyone Watching?
News, Weather and “Entertainment” • 45% view news at least weekly • Movie trailers drive a high share of female viewers: 47% vs. 35% of men* • Men prefer amateur videos over women, 44% to 30%*; However women frequently watch “user-created” from trusted communities (e.g., baby home videos)

Source: Online Publishers Association, “Online Video Advertising, Content and Consumer Behavior: June 2007;

*eMarketer “Women Online: Taking a new look”, March 2007

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What and Where

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Key Video Destinations – What about TV Networks?
TV Network websites are indeed gaining momentum • Individually it’s hard for them to compete in terms of share of visits, however as a cluster they make a significant dent • When scaled by gender, TV networks actually are taking the lead for the #1 destination for women, just ahead YouTube 47.8% vs. 47.7% • NBC leads the broadcast networks at 37% share of visits, followed by ABC with 30% share* News sites such as CNN.com are also significant • 35% total share vs. YouTube with 42% and * Hitwise, April 2007 , **Harris Poll Jan 2007 networks with 41%** TV
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Delivering Results

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Benchmarking: In-stream CTRs Higher than InBanner Units
Click-through Rate
1.40%

Click-through Rate by Format

0.74% 0.47% 0.40%

floater *

in-stream

expandable

standard

* Note: It is DoubleClick’s supposition that the high click-rates on the floater format is due in significant part to consumers attempting to close the units and missing the close box. Source: DoubleClick Rich Media and Video (Klipmart) campaign benchmarks, on-page plus in-stream ads, June-Sept. 2006

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Causing Action

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Benefits to Marketers

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Qualitative Effects

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Performance by Format

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Performance by Frequency

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Enhanced Results
• The TV360 model delivers impact beyond what either medium can Online Only TV Only TV 360 deliver alone
16.8% 16.6% 14.1% 11.8% 11.0% 8.5% 13.3% 11.4% 11.7%

10.7%

4.7%

5.0%

Aided Brand Awareness

Ad Awareness

Brand Favorability

Purchase Intent

Online Only
16.8

TV Only

TV 360
16.6

Lift vs. Control

14.1 11.8 11.0 11.7

13.3 11.4

10.7

Source: NBCU Dynamic Logic Cross Media studies (average of 9 brands)

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Implications & Best Practices

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A Shift in Planning
• Advertisers need to plan for shifts in on-demand media habits
– Young adults and affluent Americans are most engaged by on-demand media devices and behaviors – Consumers’ desire to control their media use continues to spread

• Traditional media outlets need to incorporate the on-demand media lifestyle into their programming decisions • Internet advertising needs to expand beyond banners, search and popups

Source: Arbitron/Edison Media research Internet and Multimedia 2005: the on-Demand Media Consumer

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A Shift in Video Creative
• Marketers need to consider the potentially disruptive nature of video placements and tune content to web constraints

– Optimize the quality and composition of their creative for web delivery – Be conscious of Codec compression and video file size implications on streaming speeds and picture output quality – Images and scenes need to be simple and uncluttered to best be interpreted within small screen spaces – Elaborate lighting effects and excessive panning, zooming, and camera movement should be minimized to avoid pixelation or blurring – Editing transitions, such as long cross fades and dissolves, should be avoided – Overly complex audio, such as ambient noise and peaking above normal audio levels, may be difficult to decipher through PC speakers – Text should be placed in space surrounding video so that viewers can clearly read taglines and calls to action

Source: Online Video Advertising, Jupiter Research, 2005

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A Shift in Metrics
• Planning
– Reach and composition into psychographic audience, not just demo • Example: “Adults who have researched purchasing new compact cars in the past six months”, instead of “M25-34” – Ability to deliver engaging user experience, not GRPs

• Delivery
– Impressions counted upon user initiation of the stream, time spent watching ad, and interaction rates with companion ad units, instead of program ratings

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Best Practices | Creative Variety
• Brand Recall
– Number of creative executions had no significant effect on recall

• Brand Attributes
– 3+ creatives had a positive impact on brand attributes vs. 1-2 creatives; 3+ creatives seen as less repetitive & annoying and more entertaining
• Among those viewing 1 creative, :30s were more likely to be seen as repetitive and annoying vs. :15s

– The threshold for repetitiveness and entertainment is 3+, while annoyance begins to decline at 2+ creatives
% of Respondents who Agree Was Repetitive Was Annoying Was Entertaining 1 Creative 74% 45% 26% 2 Creative 76% 43% 27% 3+ Creative 65% 40% 31%

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Best Practices | Interactivity
• Brand Recall – Among ads with branded canvases, those with complex interactivity (e.g. playing games) generated significantly higher recall than ads with simple interactivity (e.g. choosing your ad) • Brand Attributes – Ads with branded canvases (vs. those without) were more likely to be seen as entertaining and less likely to be seen as repetitive • Respondents viewing ads with branded canvases were also more likely to rate their experience on the NBC.com video player excellent/very good – Respondents exposed to ads with more complex interactivity were more likely to agree that the ads: • Caught their attention • Made them want to know about the brand • Were better than advertising in other full episode players

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Best Practices | Ad Content
• Think Advertainment, not Advertisement – Viewers are more open to enjoying the advertisements. Give them what they want by creating ads that are entertaining as the video clips with which they are paired. Make the advertising a part of this engagement by telling compelling stories rather than repeating TV spots. • Shoot more video • Be more creative Active mindset equals greater action – People who watch long form video content are more engaged with every aspect of the experience, including the advertising. This implies that viewers that sit down to watch a one minute clip come to the screen with different mindsets. Consider having multiple creative units depending on the mindset of the watcher. Use all the units on the page as a team – Advertising can be annoying, but it doesn’t have to be. Viewers respond to ad formats that don’t intrude unfairly. The preference for banner ads supports this, but banner ads can be supported by a comprehensive ad experience that ties display ads, sponsorships, and in-video ads together in a coherent package. Be mindful of advertising length!

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Questions? Comments? Sarcastic Remarks?

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