ChasNote

According to the latest McKinsey Quarterly (reg req),

“Short-term mismatches between supply and demand appear greatest for the video ads that interrupt or precede online content, such as news clips. The inability of consumers to skip these ads and their use of sound and motion—proven tools for driving brand awareness among consumers—make online video highly attractive to marketers. According to many of the video suppliers we interviewed, very little unsold advertising capacity remains today. Assuming that marketers don’t increase the number of ads they place in each video stream, the maximum supply of video ads is currently about $600 million a year—far less than future demand, which we expect to reach $1.4 billion to $3.2 billion in 2007.”

“Video ads that interrupt or precede online content”? Does the supply shortage go away — and the market opportunity zip past $600MM — if You Tube starts selling pre-rolls? That’s an area I want to watch. Will the ad model for online videos follow the traditional online news model (pre-rolls and in-stream spots like you see in Diggnation or CNET videos), or the ads-only-at-the-end model currently used by Rocketboom, Ze Frank and Revver?

According to the latest numbers from NNR (as published at MediaPost)

“More than 9.2 million Web users, or 6.6 percent of U.S. adult Web users, have downloaded an audio podcast in the last 30 days, compared to 6.7 million users (4.8 percent) who published blogs in that time, according to the research company. Nielsen//NetRatings also reported that around 5.6 million online adults (4 percent) have downloaded a video podcast in the last 30 days.”

Geez, those are big numbers. Back in April (ChasNote 4/7/06), I posted on Forrester analyst Charlene Li’s estimate that there are only 700,000 regular podcast users, audio and video combined. I argued that her numbers are too low — but 9,200,000 podcast listeners and 5,600,000 video podcast viewers? If we can believe it, that’s some growth!

Staci at PaidContent.org reports that online viewers of ABC show experienced “86 percent recall of the ads — roughly twice the amount for regular TV.”  Wowsa.  She points out, of course, “the ad setup isn’t standard. Each episode has a single sponsor; ads are shown three times and many include interactive elements.”

Research firm PQ Media is out with a report on ad spending in weblogs, podcasts, RSS and the rest of the “social media” platforms (from MediaPost). Is it me, or has MediaPost devised some annoying app that prevents cutting and pasting from their articles? In lieu of quoting the article…. PQ Media estimates 2006 spending will be $49.8MM, up from $20.4MM in 2005. Most of the 2005 spending — $16.6MM — was for advertising on blogs, which the report calls “the most mature of the user-generated online media segments.”

Om cites a report by Forrester’s Charlene Li (see Om Malik’s Blog) that says podcast usage signifcantly lags podcast hype. In 2006, she predicts, about 700,000 households will regularly download and listen to podcasts.

While I certainly won’t argue that the hype isn’t outpacing the downloads, Li’s figure on regular podcast users can’t be right. Diggnation, the weekly program hosted by Kevin Rose and the gang from Digg.com, is downloaded 150,000 times a week. Amanda Congdon’s Rocketboom has 150,000 viewers on a bad day.

Assuming it’s the exact same people who watch every new episode of these programs (which would be a miraculous story of unprececented audience loyalty), that says 2 podcasts alone represent 43% of of total podcast usage in the world. Throw in The Dawn and Drew Show, and you’re getting pretty close to Li’s grand total users! I’ve got to believe there’s a few more out there.

From Sam Whitmore’s Media Survey:

Leading bloggers need help selling ads, negotiating deals with bandwidth providers, and the list goes on. From a business standpoint, there’s a ton to do and no time to do it.

Hear Chas in his own words on the SWMS Tech Media This Week (13:29) podcast, which is now posted.

Click here to listen to the conversation: Tech Media This Week podcast.

From AdAge: 72% of prospective iPod users will watch a 30-second commercial if the sponsor picks up the $1.99 fee for the download, according to a study by Frank N. Magid Associates. After the initial PR glow fades, though, will advertisers continue to pay $1990 CPMs?!

According to The San Jose Merc, Drew Domkus is making enough money from ads in “The Dawn & Drew Show” that he quit his job. Congrats, Drew! I hope there will be more where that came from. The gang at “Mommycast” is also putting up big numbers:

“Virginia moms Paige Heniger and Gretchen Vogelzang began ‘Mommycast’ — a show about the joys and travails of motherhood — in March. The pair has quickly become podcasting stars, drawing hundreds of thousands of listeners a month and appearing on national news shows.”

“In November, the duo announced what is perhaps the most lucrative podcasting marketing deal to date — a 12-month sponsorship agreement with Dixie paper products, worth more than $100,000.”

Rafat wonders when TV-style commericals will make their way onto iPods (PaidContent.org):

For now, ABC, which is providing TV show downloads for it at $1.99 an episode, says that won’t be the case.
But skeptics don’t believe it. “TiVo and satellite radio were not ad-supported but they are loosening their guidelines to accept ads,” said Brad Adgate, research director at Horizon Media. “It really depends on the finances of Apple.”

While Apple may own the decision in the short term, I’m guessing on-demand mobile video will proliferate beyond iPods, and the content providers (have you heard this one before?) will trade the pay-per-view model for widespread, ad-supported viewership. Yup, podmercials are coming.

From a Forbes.com article on podcasting revenue models:

“Stan Sorensenm, senior director of product management and marketing of Melodeo, believes there are four possible ways to monetize podcasting:

“– Embedding advertising in the audio itself. Basically, this uses the traditional model of radio.

“– Free and premium channels. This is how many content sites make money. There may even be subscription services, kind of like a magazine.

“– An enterprise model. This would mean selling sophisticated products to major customers that would have special features, such as security.

“– Advertising, which is currently the predominant approach.”

Um, I recommend merging #1 (advertising) and #4 (advertising) into a single revenue line in the business plan before you talk to the VCs. I do agree that advertising is a valid income stream whenever large, upscale audiences tune in to quality programming. The trick is scale. One wonderful aspect of personal media is its ability to make public voices that aren’t mainstream, which often also means smaller, more intimate audiences. Programmers who appeal to similar audiences will need to band together in order to deliver advertisers hundred of thousands of listeners at once. As for #2, though, I’d be surprised to see podcasts succeed with paid-by-consumers models where just about every other online content play, many of which are “kind of like magazines” today, has failed. I’m willing to bet the bulk of podcast revenue in the next 2 years will come from some variation of #3 — corporate customers paying for professional content (especially if we include investors here), or B2B marketers who cover these fees by sponsoring podcasts aimed at corporate customers.