Online Ad Prices Falling

PubMatic's Web site ad price index indicates that the economic slowdown in the United States is beginning to affect the online advertising industry, with overall monetization dropping by 23 percent. The PubMatic AdPrice Index is based on data from over 3,000 publishers and billions of ad impressions.

The PubMatic AdPrice Index revealed surprising weakness in monetization for the vast majority of Web sites.
Large Web sites fared the worst while small Web sites managed to maintain their monetization rates. eCPMs for large Web sites (more than 100 million page views per month) dropped dramatically by 52 percent from 38 cents in March to 18 cents April. Medium Web sites (1 million to 100 million page views per month) were nearly flat, with monetization dropping from 34 cents in March to 33 cents in April. Small Web sites managed to improve their monetization, increasing from $1.18 in March to $1.29 in April.

82% Internet Pentration and Rising

Roughly one fifth of all U.S. heads-of-household have never used email, according to Parks Associates. That's not even close to being the most significant implication, though. If the Parks survey data can be extrapolated to the whole population, and Parks Associates believes it can, then Internet subscriptions now reach 82 percent of U.S. consumers.

The most recent annual phone survey of U.S. households found 20 million households are without Internet access, approximately 18 percent of all U.S. households.

“Nearly one out of three household heads has never used a computer to create a document,” says John Barrett, director, research, Parks Associates.

The Parks Associates poll found seven percent of the 20 million “disconnected” homes plan to subscribe to an Internet service within the next 12 months. And "Internet resisters" continue to dwindle.

At year-end 2006, 29 percent of all U.S. households (31 million homes) did not have Internet access. So 11 million more homes have gone online over the past year, if the Parks data can be extrapolated.

One half of those who have never used email are older than 65, and 56 percent had no schooling beyond high school.

User Generated Video Growing Faster than Expected

Because of significant growth in the Chinese market, In-Stat researchers have revised upwards their forecasts for user-generated video use and revenue.

Total worldwide UGV revenue is expected to eclipse U.S. $1.19 billion by 2012. In-Stat projects 160 billion UGV videos will be viewed in 2012.

Individuals who use mobile phones to participate in online video sites are most likely to contribute to the market, both financially and in terms of content, In-Stat argues.

HBO for iTunes?

There are lots of rumors about a possible earlier release of the 3G iPhone as shortages build and we approach the June 2008 date when a 3G-capable iPhone will be released. Something else that actually is more important might also be happening at a faster pace, though.

Since most video viewing is substituted for some other mode (you might watch a movie at a theater, or on a DVD, or as video on demand, or on a premium channel or on broadcast TV), changes in the "release windows" that dictate when each delivery mode can get the content also have the effect of shifting revenue shares within the ecosystem.

According to a report published by Conde Naste Portfolio, Apple is on the verge of offering HBO original programs on iTunes. The programming, which would include hits like the Sopranos and Deadwood, offered at a premium to the standard $1.99 an episode fee.

If true, the deal will be a break in tradition as much for HBO as for Apple, and provide further evidence of a quickening pace of "release window" modifications that have more content going to some form of digital delivery.

As release windows change, so do the financial and contractual agreements that govern when content can be made available. That, more than anything else, will determine how successful downloads, streaming and video on demand can become.

Up to this point HBO has been a nearly-complete hold out in the digital and streaming venue. It now is testing streaming for its current subscribers, but has completely avoided any availability for non-subscribers.

Media Consumption: TV Leads, Internet Grows

Adult consumers in the United States still spend more time in front of televisions than they do online, according to a survey sponsored by the Television Bureau of Advertising industry association and conducted by Nielsen Media Research.

Survey respondents ages 18 to 34 spent over an hour per day more watching TV than they spent more time watching TV than they did in online pursuits, the study found. The gap between time spent online and time spent watching TV is closing, however.

In January 2008, TVB found that 18 to 34 year-olds spent 60.6 minutes more watching TV per day (206.0 minutes) than they did online (145.4 minutes). That is down from June 2006, when the gap was 137.4 minutes: 246.7 minutes for TV and 109.3 minutes online. Moreover, TV time decreased while Internet time increased.

A separate study by JupiterResearch and Ipsos Insight reported results in more discrete age groups and found that TV use actually trailed Internet use among the youngest consumers. As of August 2007, US consumers in the 18 to 24 year-old range went online an average of two more hours per week than they spent watching TV.

Neither study specifically addressed multitasking, which can be significant, especially among younger consumers.

"Young people rarely use just one medium at a time," says Debra Aho Williamson, senior analyst at eMarketer. "Often, when they are online, they’ll have TV or music on in the background."

One might be skeptical about a couple elements of both surveys. The TVB study suggests that adults between 18 and 34 spend 115.6 minutes a day listening to the radio.

The Jupiter and Ipsos survey suggests adults 18 to 24 spend three hours a week listening to the radio.

My totally unscientific experience is that none of my 18 to 24 year olds spend any time at all listening to the radio. For similar reasons, I am somewhat skeptical about "time spent in front of the TV."

Verizon DSL: Changing Metrics

As markets change, so do metrics. It used to make sense to count "access lines." Not any longer. These days it makes more sense to count "revenue generating units." And at least in Verizon's case, it is starting to make less sense to count "digital subscriber lines," as FiOS increasingly becomes the lead broadband access product.

To be sure, broadband access markets also are nearing saturation. Most customers who want broadband already buy it. But as Verizon replaces copper plant with FiOS, DSL connections will decline, to be replaced with optical connections.

IGI Consulting points out that Verizon's rate of net additions of DSL subscribers has been slowing for a couple of years. Again, some of that is market saturation, some of it is FiOS replacement. But rates of increase for any product slow as demand is satisfied. Rates also decrease when product substitutes are offered.

In the first quarter of 2008 Verizon FiOS TV customers accelerated to 263,000, a sequential increase of 16 percent. Verizon now has more than 1.2 million FiOS TV customers,19 percent penetration of marketable homes. Over the past year Verizon has added more than 850,000 FiOS customers.

Total broadband subscribers, including DSL plus FiOS internet increased to 8.5 million up 1.1 million or 15 percent from a year ago. Verizon added 266,000 broadband customers in the quarter. FiOS Internet access customers now represent over 1.8 million subscribers, representing 23 percent penetration of marketable homes.

U.S. Internet Video Watching up 64% Year over Year

U.S. Internet users viewed 11.5 billion online videos during March 2008, representing a 13-percent gain versus February and a 64-percent gain compared to March 2007 viewing, according to comScore.

Google Sites again ranked as the top U.S. video property with more than 4.3 billion videos viewed (38 percent share), gaining 2.6 share points over February. YouTube.com accounted for 98 percent of all videos viewed at Google Sites.

Fox Interactive Media ranked second with 477 million videos (4.2 percent), followed by Yahoo! Sites with 328 million (2.9 percent) and Viacom Digital with 249 million (2.2 percent).

Nearly 139 million U.S. Internet users watched an average of 83 videos per viewer in March. Google Sites also attracted the most viewers (85.7 million), where they watched an average of 51 videos per person. Fox Interactive attracted the second most viewers (54.3 million), followed by Yahoo! Sites (37.5 million) and Viacom Digital (26.6 million).

Altogether, 73.7 percent of the total U.S. Internet audience viewed online video during March, comScore says. The average online video duration was 2.8 minutes and the average online video viewer watched 235 minutes of video.