A post on Broadstuff on the rise of internet TV ends by asking why viewers who watch the same show over the net are worth less to advertisers than those who watch conventional TV. I think part of the answer is that the broadcasters want to keep it that way — as shown by their apparent reluctance to release internet viewing data.
The problem for the broadcasters is seen by extending the argument that viewers using their PCs are worth as much as those using their TVs a little further:
- A viewer watching the same show on their PC is, ceteris paribus, worth as much to an advertiser as a viewer using old fashioned broadcast (including cable or satellite) TV.
- The Internet, and the web in particular, provides more accurate targeting and better metrics of performance than broadcast media. If anything, Internet viewers should be at a premium.
- Given this it should also be true that a viewer watching other video material should also be worth the same to an advertiser. It does not really matter if the video an embedded in was originally a TV show or made for the internet: the viewer's attention is worth the same.
- What about the audience for other media on the internet? The differential in rates should reflect the known differences in effectiveness of different media (video, audio, text) in conveying the advertisers message.
TV currently commands very high advertising rates. If accept the consequences of agreeing that it is delivering the viewer that counts, rather than how the viewer is delivered, then it is not just the broadcasters that can deliver those viewers to advertisers.
The problem for the broadcasters is that the barriers to entry for delivering video over the internet are much lower. The far lower infrastructure requirements mean that costs are far lower, there are no real limits on the number of channels available. The result is likely to be a permanently far more fragmented market and much lower margins.
It is difficult to fail to conclude that TV ad revenues are under serious threat. The beginnings of this have been seen in recent falls in several companies' ad revenues. If we do accept the argument that it is getting the viewer to see the ad that counts, then this is just the start of a sustained slide.