Historic Milestone for Online Advertising Reached

Ad rates for popular shows like The Simpsons and CSI are higher online than they are on prime-time TV. That's a stunning reversal from the rule of thumb that online ads cost less, often far less, than they would if placed on a TV, radio, magazine or newspaper outlet.

If a company wants to run ads alongside an episode of The Simpsons on Hulu or TV.com it will cost the advertiser about $60 per thousand viewers, according to Bloomberg. On prime-time TV that same ad will cost somewhere between $20 and $40 per thousand viewers.

Why the reversal? Targeting and engagement. Online viewers have to actively seek out the program they want to watch, so advertisers end up with a guaranteed "captive" audience for their commercial every time someone clicks play on Hulu or TV.com.

Also, fewer online ads means viewers are twice as likely to remember a commercial they've seen on Hulu than on television, Bloomberg reported.

The challenge for the networks, whose total prime-time audience shrank 3.6 percent last season, is that Web viewing and ad sales, while increasing, are still too small to replace traditional revenue sources.

Therein lies the danger. Networks risk siphoning off prime-time audiences with lots of inventory and higher sales volumes to sites with less inventory and lower ad sales volume.

A “Simpsons” episode on Hulu has just 37 seconds of ads, for example. A broadcast episode has nine minutes and produces three times the revenue per viewer at half the price.

So cannibalization remains an obvious danger.

http://www.bloomberg.com/apps/news?pid=20601204&sid=atKGiQOMco.Y

Online Video Seen As Biggest Growth Opportunity in 2009

A broad cross section of executives from the telecom, cable, broadcast, mobile, satellite, consumer electronics, ISP and content businesses--but heavily weighted to broadcast industry firms--think video is the consumer service with the brightest prospects for growth in 2009.

In total, about 70 percent of survey respondents to a Pike & Fischer survey are from the video or radio industries, so it perhaps is not surprising that online video and high-definition TV emerged as the applications seen as having the greatest opportunities for growth in 2009.

About 27 percent of respondents cited Web-based video as the broadband application that will generate the highest adoption rates in 2009, though a quarter  believe HDTV will get the biggest number of new users.

But executives from cable and telephone companies were most likely to see online video as the fastest-growing application in 2009. More than half of cable executives and 56 percent of telephone industry executives said they believed online video would have the greatest growth.

About 40 percent of content provider executives and 29 percent of broadcast industry executives thought HDTV would be the fastest-growing app this year, a prediction boosted by the digital TV transition, which by definition replaces standard-definition over the air broadcasting with HDTV substitutes.

Broadband More Resilient than Mobility?

More than twice as many respondents to a Pew Internet and American Life Project survey say they have cut back or cancelled a cell phone plan or cable TV service than said the same about their internet service.

In the past 12 months seven percent of all adults have cancelled or cut back online service. But some 22 percent of adults sday they have cancelled or cut back cable TV service.

About 19 percent of all adults say they have cancelled or cut back cell phone service.

Mandatory Government Control of Broadband Pricing is Aim of HR 2902

Rep. Eric Massa (D-N.Y.) recently announced HR 2902,  the "Broadband Internet Fairness Act,” which would mandate government control of pricing for broadband. Consumer protection is a noble and worthwhile goal. Whether HR 2902 would have the opposite effect is the issue.

It is reasonable to assume that investment capital, and appetite to continue building broadband facilities, would dry up were the bill to become law.

What is Holding Up Blu-Ray Adoption?

It's hard to know precisely what message consumers are sending about HD DVD players these days. There no longer is a

format war, as Blu-ray has won its fight with HD DVD. But sales haven't exploded.

In fact, a recent Harris Interactive poll suggests that 93 percent of Americans are not likely to buy a Blu-ray player within the next year, up from the 91 percent who said last year that they were not likely to buy one.

But what that means isn't clear, yet, for several reasons. Popular consumer electronics adoption never seems to hit an inflection point until about 10 percent penetration of households.

About seven percent of U.S. households may already own a Blu-ray device, so we would be, by historical standards, about three percentage points away from any serious test of Blu-ray demand. Price points for both players and physical media seem high, by historical standards, as well.

In the past, no consumer innovation seems to take off until retail prices for devices get to about $300. So far, Blu-ray has failed to hit those levels, and some of us would therefore not expect much change in the adoption curve until that price point is reached.

Many speculate that a shift to digital media also is playing a part in depressing initial demand. It could be that consumers are using more pay-per-view methods or downloading to satisfy some needs Blu-ray was intended to address.

But it also is possible that consumers are wary of buying into yet one more playback technology when they've already been through VHS and DVD physical media. Some may simply be unwilling to shift to yet another format, despite the advantages.

Some 83 percent of U.S. homes own DVD players, and consumers might simply be signaling that image and sound quality is "good enough" on those DVD players, for the intended purposes. Consumers might also be waiting to buy Blu-ray as a replacement device, when their current DVD players stop working.

Whatever the reasons, Blu-ray is in a slowish adoption mode at the moment. Precisely why is hard to determine, as there are any number of reasons why an adoption tipping point has not been reached.

Singapore Will Offer 4 QoS Levels for Broadband: Key Implications for Net Neutrality Debate

It now appears subscribers to Singapore's new fiber to customer network will be able to buy different grades of service, ranging from "best-effort" to "mission-critical." Grades of service on the new wholesale network will be sold directly to providers of retail services, who will have the ability to buy four distinct grades of service.

Nucleus Connect, which will operate from two central offices in Singapore, from which retailers can buy wholesale broadband, now says it will offer the differentiated services as part of the "Opennet" framework, which allows retail providers to buy passive optical connections or "lit" service.

The network will support GPON, Ethernet, VoIP, VPN, videoconferencing, leased lines, security, mobile

backhaul and multicast functionality.

Under the new structural separation policy, the Opennet consortium, headed by Axia Netmedia with Singtel, will deploy a passive optical network, while Nucleus Connect, a StarHub unit, will operate the switches and electronics on the network as a wholesale, providing open access to retail service providers.

Though Nucleus Connect initially will be the only “operating company” allowed to operate electronics on the network, other “qualifying companies" will able to do so in the future. Most observers believe such firms will be other international carriers serving business customers in Singapore. Consumer providers are likely to buy active opto-electronics capability from Nucleus Connect.

The broader implications are clear enough. Irrespective of regulatory framework, the notion that end users can buy broadband with four distinct quality-of-service levels is important.

The ability to buy different broadband QoS levels offers a nice way to match end user applications, network demand and service provider revenue more directly. The concept needs to be considered elsewhere, including the United States, as the shape of "network neutrality" rules are weighed.

One wouldn't want to prevent end users from having such choice.

Why do People "Unsubscribe" from Email Lists?

Though email marketing is one of the more effective and less expensive ways to retain and engage customers, content irrelevance is an almost sure-fire predictor of user "unsubscribe" behavior.

Though comScore found earlier this year that e-mail had a 4.4 percent sales conversion rate in the U.S. market, the key is relevance.

In a survey by MarketingSherpa and ad:tech, 44 percent of marketers said that emails to house lists had “great return on investment.”

The issue is to keep them from "unsubscribing." According to an Epsilon and ROI Research study, 55 percent of email subscribers in the US and Canada unsubscribe from opt-in emails occasionally—and 14 percent do so frequently.

Only five percent of survey respondents say they "never" unsubscribe.

“North Americans are receiving a lot of content, and at the same time they're getting more and more selective about the kinds of e-mails they want to receive,” says Kevin Mabley of Epsilon.

Most Internet users unsubscribed due to irrelevant content.

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