Challenges in the new media era: First, newspapers; Now, TV?
By Erina Lin, Monday 25 February 2008 at 21:31 :: World Digital Media Trends :: #1314 :: rss
Could television be the next industry run over by the Internet? An article on Wall Street Journal pointed out the possibility - Online video has been a hit. In December alone, Americans watched more than 300 million videos on YouTube, and spent 34 percent more time watching it compared to the same period in 2006.
Although it has not been entirely at the expense of television viewing, the growth still comes as a shock to network executives. What’s more, Google's new plans to squeeze money out of online video advertising could also cause broadcasters a lot of pain.
However, Google has yet to make money out of online video, although it has dominated the business.
Now, Google is trying two strategies. First, it plans to sell ads on videos appearing elsewhere online. The ads will be shown as the form of videos or clickable text, which appears on a small portion of the larger video image, the Wall Street Journal reported.
Second, it plans to place clickable video ads on the side of its search results. Google can generate revenue from video advertisers whenever the video ads are clicked.
Broadcasters could find themselves in a choke-hold similar to what newspaper publishers are experiencing, if Google can succeed in marrying advertising to online video. The newspaper industry has suffered from “declining circulation, higher production costs than their digital brethren and advertisers that are switching to cheaper, more effective online distribution,” according to the article, posted by Media InfoCenter.
Broadcasters have also experienced the challenge of declining circulation and higher production costs. Google's initiative might bring them more - the cost of reaching a thousand viewers online is about one-fifth cheaper via a major broadcaster. Another fact is that users clicking on ads that interest them means a campaign's efficiency can be measured more accurately, the article stated.
The roughly US$80 billion annual market for television advertising has held up remarkably well over the past several years. It might now be in for a big challenge.
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