The more ads, the better. That seems to be the strategy for boosting online
ad revenue for publishers of all kinds. First, the Online Publishers
Association (OPA) decided that making ads bigger and bolder was one way
to help boost publishers’ dwindling CPMs. Now, the TV networks are
concluding that loading their online video shows with more ads is the
best way to increase digital revenue.

It seems to fly in the face of common sense – after all, consumers have
flocked to DVR because they can skip all of the ads hurled at them on
broadcast TV or cable. Meanwhile, with shorter attention spans on the
web, won’t more ads just make online viewers tune out? Research from the
networks says no.

Hulu screengrab

The stats

The NYT’s Brian Stelter highlights stats from a recent study by Turner Broadcasting (parent company of TBS and TNT) and Magna Global:

Viewers of 30-minute TBS sitcoms like “Meet the Browns” watched, on average, 40 percent of the episode, including the ads, if there was one minute of ads and 37 percent of the episode if there were 16 minutes of ads.

Viewers of hour-long TNT shows like “Memphis Beat” watched 59 percent of the episode if there were one minute 15 seconds of ads, and 49 percent of the episode if there was 20 minutes of ads.

The big takeaway was that on average, online viewers watched the same number of minutes in a show, no matter how many ads it contained.

The CW network (parent company of shows like Gossip Girl), said it would increase the ad load on all content on cwtv.com last spring. The site has seen both gains in video views and user retention since then: 

According to the measurement firm comScore, [cwtv.com] averaged 57 minutes of video viewing (a total of ads and content) per visitor in September, up 140 percent from the same month in 2009.

This follows research from ABC.com back in early 2009, which found that the company could double the number of ads in an online show – with little to no negative impact on ad recall, effectiveness or purchase intent.

The network reaction

The networks have responded by increasing ads in their digital shows across all devices. ABC increased the number of ads in its popular iPad app – up to double the number per episode, in some cases – in mid-June. Fox and NBC revealed their plans to follow suit just two weeks later.

Clearly, this hasn’t been a decision the networks have taken lightly – but I just can’t help but wonder whether the research fails to realistically gauge viewer sentiments. (Would you be happy with double the ads in your favorite online video content?) It’s also leading the networks to ignore paid content as a potential revenue stream. 

Customers will pay for online video content

Take Hulu Plus and Netflix’s new streaming-only option as the most recent examples. Hulu has definitely made more money from advertising, but that hasn’t stopped the company from fully launching its Hulu Plus subscription service after a limited trial. For $7.99 per month, users get unlimited access to all the content available through Hulu.com, back issues, and across multiple devices.

Meanwhile, Netflix just launched a streaming-only content rental service, also for $7.99 per month, and also across multiple devices, including the Xbox 360, Playstation 3, and Roku. 

Netflix streaming option

Bottom line is, users will pay for online video. So forcing them to watch more ads isn’t the only option for networks trying to make more money. What do you think? Are you willing to watch far more ads in your favorite shows online – or would you rather pay to keep them ad-free (or ad-minimal)?