Yesterday, I wrote about the new deal between ABC and Cox Communications to create new content for the VOD platform with advertising and the lack of ability to fast-forward on the viewer's part. Along with that, NBC-Universal has released new plans for advertising for online video content. In short the plan is to eliminate the practice of running longer advertising before short clips.
According to a story by Daisy Whitney with TelevisionWeek, NBCU has announced plans to air ads in front of video content for online digital video, starting in July. For full-length episodes or long excerpts, 30-second ads may run before the content begins. For short clips, advertising will be no more than 15 seconds. The idea is to try and find new business models to monetize online video without angering consumers to the point that they would rather seek the clips elsewhere...or not watch them at all.
Advertising Age's Abbey Klaassen writes that NBCU's senior VP of digital media sales Peter Naylor said, "We all intuitive know when we accept these 30s, we're aiding and abetting in the delay of the evolution."
Whitney writes, "The decision comes amidst an ongoing debate on pre-roll 15-second and 3--second spots online. Most consumers disdain such ads, especially because they can't skip over them. As a result, media companies have been exploring new forms of online video advertising."
Rafat Ali with paidContent writes, "NBCU is making itself usable [ . . . ] This is a revenue risk, considering about a quarter to a third of all pre-roll coming into NBC Universal still clocks in at 30 seconds."
So what does this mean? NBCU is leaving money on the table, not accepting 30-second spots for their short-form videos that advertisers want to put out there, because they feel that there might be more profit to be gained in creating a business model that angers customers the least. In short-term, that doesn't make a lot of sense. However, in creating a sustainable busienss model, it makes quite a bit more. In other words, a short-term loss is NBC's way of hoping for long-term gain.
The Ad Age article links this to iVillage taking a stand against pop-up ads, advertising that might turn a profit but turns viewers off, and NBC is hoping that its site will become even more popular as it becomes more user-friendly.
One component of this deal that has been pointed out is that 30-second spots are just easy for advertisers to multipurpose and put before online video, but if 15-second spots becomes the online standard, it will force advertisers to put more thought into adapting the commercial message for the media format in which it will be consumed.
In the meantime, NBCU has struck a deal with Brightcove and will be running 15-second ads before its content on that online video platform as well.
I think there's a lot to be said about respecting one's audience, and NBC is taking a leap forward to quit taking the easy money and start forging a business model that might set the standard for providing users with what they want while also supplying a strong business model around online video content. It will be interesting to see if other television companies will follow suit with their online video offerings as well.