ChasNote

That according to Comscore (Media Week):

“More than half of Internet users who possess mobile phones are not interested in, are unaware of, or have no interest in Mobile TV, according to a new survey conducted by comScore, illustrating just how far the medium has to go before it becomes mainstream.”

Liz Gannes of GigaOM and NewTeeVee moderated a panel of leading execs from the digital video scene: Jay Adelson, CEO of Revision 3 (and Digg); Erik Hachenburg, CEO of Metacafe; Howard Lindzon of Wall Strip; and Marc Siry of NBC Universal’s NBBC unit. Some interesting nuggets:

Revision 3’s Diggnation has more viewers watching the program on TVs via set-top boxes than viewers who watch on a computer. (Diggnation is also watched offline as a podcast more than it is online, but that’s less surprising.)

Metacafe pays a $5 CPM to content producers whose videos attract more than 20,000 views. Erik says that this compensation program acts as a filter that delivers “cleaner” content than the YouTube approach. In other words, more original content and less content re-purposed or stolen from other IP producers. The logic is, to collect your check you need to supply accurate identifying data about yourself, and when you do that you’re less likely to upload someone else’s content. Smart idea! But it may leave Metacafe open to scams like those that plagued Epinions back in 2000-2001, where some members gamed the pay-for-performance system by building bots to vote for their own reviews, or today’s click fraud schemes that manipulate Google’s AdSense program.

The “DJ read” sponsorship format a la Howard Stern or Paul Harvey will replace agency-supplied creative. I agree, up to a point. For large-reach video programs (like Diggnation or NBC’s SNL or Ask A Ninja), a sponsor can take the time to work with that program’s producer on the sponsor segment, the “spot” that the show’s host creates based on the sponsor’s guidance. But imagine 25,000 individual video producers using YouTube or Metacafe as a distribution platform. How does a sponsor get a live-read commercial into each of those videos? And, in the event a sponsor does, how does it review all 25,000 individual “spots” to make sure there’s no funny business, no stumbling over its tag line, no mispronounced product names?

The most important point made by several on the panel: The future of video is about programming. Sure, someone still needs to create original content, but viewers won’t be tuning in because that media outlet created the content — they’ll tune in if that media outlet is the best at assembling, aggregating, annotating, organizing and filtering the content they distribute. If they happened to create the content themselves, fine, but their viewers are unlikely to care. I couldn’t agree more. If you think about it, isn’t that process — content programming — that’s always determined the channels we watch? If CNN, Fox, NBC, ABC and CBS all roll the same Baghdad footage originally filmed by Al Jezeera, I tune into the network that best helps me interpret it.

I’m glad to see this. Being offensive — even in the name of humor or whatever else — is becoming more expensive. At least four blue-chip advertisers have pulled the plug on the “Imus in the Morning” sponsorships. A P&G spokesperson told AdAge:

“This particular venue where our ad appeared was offensive to our target audience. And so that’s not acceptable to us….”

Related: Advertisers pull ads off Ann Coulter’s site (Link).

Jeff Jarvis helped coordinate a creative online ad program for Dupont: Short videos profiling Dupont technologies like Kevlar, starring the original host of Rocketboom, Amanda Congdon (BuzzMachine). In an interview with Clickz, Dupont’s Gary Spangler is pleased with the results.

“‘We were looking for a hostess or host that would be interesting to the viewers,’ said Spangler. ‘I was familiar with Rocketboom and knew Amanda has … online viewership and is already skilled in video blogging. Her experience and acceptance by a large audience around her delivery and appeal led us to think she was a clear choice for delivering these messages.’”

Dupont is running the spots on several FM sites (thanks, Dupont and Starcom!): Digg, Boing Boing, the Athanasius Kircher Society, Left Lane News and Boompa.

Last week’s TNS report (see Clickz) on 2006 ad spending put numbers to an obvious trend: Online advertising is the growth leader (up 17.3%), while print is mostly down and TV (minus Spanish-language) is just barely above flat.

Within online, the report also surfaced a less obvious trend, that large marketers are moving dollars to online display advertising more slowly than smaller-budget advertisers. On average, marketers in 2006 allocated 6.5% of their budgets to online while blue chip brands put only 4% against Internet ads. TNS Senior VP of Research Jon Swallen chalked up the slower adoption by the big spenders to an availability problem: “it’s hard to find inventory to spend more on.”

Huh?! Not enough online inventory? Even at top brands like Yahoo, certain large swaths of the site (Mail, My Yahoo, Groups, etc.) run house ads and cut-rate remnant deals. Ad networks don’t have anywhere near 100% fill rates for participating publishers, and the most efficient ad network of all — Google’s AdSense program — serves PSAs a fair amount of the time.

Market Inefficiency v. Lack of Inventory

Clearly there’s not an inventory problem online, but instead a quality inventory problem. There is limited inventory adjacent to high-quality content, and — maybe this is what Swallen meant — it’s still very hard to find it and sponsor it. There’s a market inefficiency problem that the ad networks and Google aren’t yet solving. The vertical publishers (think CNET’s tech sites or Jupiter Media or Nickelodeon Online) have quality, but not enough of it; the ad networks and Google have scale but can’t yet guarantee quality.

The Story of Google’s Effective Ad Rates

The two sides of Google’s money machine illustrate the point. Google takes a purely rational approach to advertising: Advertisers in a competitive-bidding situation will pay higher and higher cost-per-click rates until the costs approach the immediate revenues generated by that click. The average CPC paid by Google advertisers is around $0.50. When people use Google’s engine to search for something specific, 17% of them will click on one of these advertisers’ ads (see ChasNote). The algorithm that matches keyword advertisers with keywords entered into a search box works great for all involved. Users of Google’s search engine are seeing highly relevant ads (a perfect match 17% of the time!); marketers aren’t paying a nickel more than the value they get from each click; and Google makes about $68 for every thousand search-results pages they serve up.

But Google’s other system, the AdSense publisher network, tries to match those same key-word advertisers with prospective clickers on other sites based on content rather than key-words entered into a search box, and doesn’t work as well. That 17% click-through rate on Google’s own pages, a proxy for how well the ad-server logic delivers ads to people who want to click on those ads, drops to something closer to 1% on non-Google sites. (Consumer mindset, searching versus reading, is another factor.) Direct-response marketers may or may not care about the lower click-through rate: They’re only paying for the completed click.

Brand Marketers Demand Scale, Quality and Safety

Brand marketers, however, are paying for more than click-through performance alone, and they hold media partners to different standards. Even infrequent snafus that put their brand — and the implied endorsement by their brand — alongside homophobic rants by Ann Coulter (ask Verizon or Washington Mutual, see CNN) or on sites that promote illegal behavior (ask Microsoft or Wal-Mart, see Variety) become unacceptable PR disasters. Brand advertisers need a combination of scale, quality and safety (more on this from Battelle, see Searchblog), and the existing artificial intelligence solutions aren’t there yet. The bots get better every day, but to accelerate the migration of brand dollars to the Internet, we still need human insight to facilitate the process.

The headline at Hollywood Reporter is “Bud.TV Going Flat As Visits Decline”:

“The beermaker’s new 24/7 branded digital entertainment network has seen the fizz from its Super Bowl kickoff evaporate quickly, averaging just 253,000 visitors in February, its first month online, according to new data from Comscore Media Metrix. A-B marketing execs reportedly projected reaching 2 million-3 million visitors per month by year’s end.

It’s an underwhelming start for a highly anticipated $30 million initiative that aimed to put Bud.TV on the same playing field as entertainment companies online. Aimed at young-male twentysomethings, Bud.TV launched Feb. 4, after Super Bowl XLI, featuring a collection of shortform comedic programming with Hollywood cachet from the likes of Kevin Spacey’s Triggerstreet Prods. and Matt Damon’s LivePlanet Prods.”

Microsoft’s Mich Mathews says most of her company’s $1 billion US ad budget will be spent on digital media by 2010 (Mediapost). I like the sounds of that! I also like to see that Microsoft is investing heavily against research and experimentation to determine how best to execute that enormous migration of dollars:

“in preparation for what would be a mass repositioning of ad dollars, Microsoft has allocated 3% of its current ad budget for a multi-continent experiment to test a series of emerging media, Mathews said. Mobile and IPTV are being gauged in Europe, interactive and out-of-home in Asia, and the effectiveness of satellite radio and RSS feeds in the U.S.“

A well-informed dinner companion last night told me Google’s average effective CPM on Google-owned search results pages is $68. Another guest at the table said Google’s average CPC for paid search (not AdSense) is $0.54, and another said click-through rates on paid ads on search-results pages average 17%. Multiply those together an you get a $92 eCPM.

Compare that the average CPM for television spots in the US: $11.

It’s no wonder Google is struggling with how to enter the brand-advertising game. Sure, there’s $80 billion in US TV spending. But the CPMs are 10-15% of what Google gets (in some parts of their business) today. Plus selling to brand advertisers requires expensive humans instead of robots and auction platforms.

UPDATE: Battelle has posted Google’s K-1 posted at Searchblog, and calls out a remarkable stat: “Astonishingly, cost of sales is 8 percent. Very low and very efficient.” Another obstacle that makes it hard for Google to get excited about hiring a bunch of human salespeople to call on brand advertisers. They’ll either succeed at automating the buying and selling of brand programs — I’m a skeptic — or they’ll go down trying.

The K-1 also let’s me extend (or perhaps check) my voodoo math. If Google Network (AdSense, etc) is $4.16BB of Google’s overall $10.6BB, that says $6.45BB is from advertising links on Google’s own pages. $6.45BB divided by $68 per thousand pages, times 1000 is about 95 billion pageviews over 12 months, or about 7.9 billion pageviews per month. Comscore Media Metrix estimated pageviews for “Google Sites” to be 11.8 billion for the month of December 2006. Assuming monthly traffic grew over the course of the year, that math about jives.

ANOTHER UPDATE: An analyst friend who covers Google reminded me that not all Google pages are search-results pages carrying ad links — only 70-75% of Google pages carry ads — which explains the difference between the $68 eCPM figure and the $92 figure. Multiply $0.54 average CPC with 17% average click-through rate with 74% pages that carry ads with 1000 to convert to revenue-per-thousand-pagviews and you get $68.

From Hollywood Reporter:

“Cartoon Network’s late-night sister channel set basic cable monthly records in total-day delivery in adults 18-34 (460,000, up 28% compared with February 2006), adults 18-24 (280,000, up 32%), males 18-34 (283,000, up 25%) and males 18-24 (169,000, up 20%). The network also extended its streak as the No. 1 channel among males 18-24 to 23 consecutive months and ranked third among basic cable networks for total-day delivery in adults 18-49.”

Online video phenom Ask A Ninja (and — I smile every time I say this — an FM partner) does at least 350,000 viewers for each episode, almost entirely M18-34. Is that a record?

At O’Reilly Radar, Tim O’Reilly picks up the thread Chad Hurley started at Davos: How will the independent content producers share in the money YouTube makes off their videos? Tim suggests an analogy where YouTube is a video distribution platform like the Internet as a whole is for blogs; ad models (such as AdSense for Content at the low end, FM at the high end) will emerge that share revenues back with the original content creators.

“Right now, even Google hasn’t figured out how to monetize YouTube. When they do, I’ll lay odds that they will provide self-service mechanisms that content producers can use to monetize their content, with some kind of revenue-sharing arrangement, just like Adsense for Content. And from there, I’ll lay odds that it will be the content providers themselves who lead the charge, just as they have done in blogging. Entrepreneurial content producers will find ways to extend whatever mechanisms are provided, and will invent new ones. And they’ll do it in-band using the service mechanisms provided by YouTube, and out-of-band by becoming celebrities monetized in other media. And there will be a rich ecology of players who grow up to help with that monetization (just like FM Publishing (in which I am, incidentally, an investor) in blogging). FM shows the right kind of collective action: build shared infrastructure for business services that exploit the opportunities that the new economy provides.”

With FM already working with content types other than blogs — UGC platforms like Digg, Metafilter and Newsvine and video sites like Ask A Ninja and Revision3’s Diggnation — maybe FM itself, rather than someone “just like FM,” will help this new indie-video economy along!