Streamed Advertising Starts Making a Dent

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Advertising banners and streamed-video ads of new sizes have crept into the online-marketing mix, giving broadband-content providers hope that the new formats will spark increased interest in Web advertising.

CNN Interactive, MSNBC and Excite@Home Corp. are among the companies with sites that push streamed-video advertising, which may fuel additional spending on Web-based ads.

"I think it is a breakthrough," said CNN Interactive senior vice president of sales and operations Charles Theiss. "We're looking to satisfy and give marketers a better value proposition."

Short-form video and audio streaming has been legitimized by top corporate executives and financial analysts who have used it to communicate with employees or update investors, Theiss contended. That should make companies more willing to budget for streaming ads, he said.

The streaming push goes hand in hand with 12 new rich-media ad banner sizes recently approved by the Internet Advertising Bureau. The larger banners, such as the long, narrow "skyscraper" units on CBS Marketwatch or the squarish blocks seen on CNET.com, also are giving content providers more ammunition in their quest for a larger share of advertising budgets.

For instance, CBS SportsLine recently boasted of its success in generating $5 million in advertising during the National Collegiate Athletic Association men's basketball tournament. Walt Disney Internet Group says more than a dozen major advertisers have used the "Big Impression" banner since September.

In 2001, CNN Interactive hopes to use the new formats to build on its past success with traditional advertising. "We're integrating the marketing approach with content and clients want to integrate into that platform," said Theiss. "It's worked well for us over the past few years."

CNN had developed a strong blue-chip advertising base of technology, automotive, pharmaceutical and financial companies before the dot-com run-up and subsequent crash. That was largely because of its reach into the workplace.

The programmer had already boasted close to 6 million unique users back in October 1998, according to Media Metrix. By this past March, CNN averaged 9.8 million users a month.

Theiss said 60 percent of CNN.com and CNNfn.com users are broadband-enabled, employing connection speeds of 180 kilobits or higher at work. "That provides a nice platform to markets to deploy streaming ads," he said.

CNN is testing streamed-video ads from three advertisers: Volvo, mydiscountbroker.com and WorldCom Inc. The video is imbedded in a banner ad. Users click on the banner and the video pops up. Theiss says CNN will expand the test to include video ads that start playing as soon as a user selects a new Web page.

Theiss is cautiously optimistic that clients will pay for rich-media advertising.

"We've seen a nice groundswell going into the upfront," he said, adding that some clients want to expand their ad presence during the economic downturn to grab market share.

And Theiss believes major corporations will be more open to explore streaming ads because they are using such content already.

"Short-form video is getting to be an accepted form of communications," he said.

In tough and changing economic times, CEOs have employed audio and video streaming to talk to employees, rather than static electronic-mail messages. Financial analysts have also used video streaming to deliver their daily commentary.

"Using streaming as advertising will naturally flow," Theiss said.

About 25 percent to 30 percent of the ads offered by Excite@Home use audio or video, said senior vice president, sales and marketing Susan Bratton. "Clients are taking their first crack at this."

High-end automaker Lexus uses both static and rich-media ads on Excite@Home sites.

"They showed the entire Lexus product line and likened each vehicle to a different extreme sport," said Bratton. The ES-300 was compared to ski jumping and the LS-470 was likened to rock climbing, Bratton said.

When users click on the Lexus banner ad, two video screens appear. One shows a Lexus car, the other a rock climber or a ski jumper. The ads last all but five seconds, but "they are very effective," Bratton noted.

In another campaign, Excite@Home aired a "What are you missing spot" that included video clips from Showtime Networks Inc.'s Showtime premium cable network. The ad generated online sales leads for the programmer.

Excite@Home is using many of the 12 new ad formats sanctioned by the IAB, including a four-inch by five-inch box — the same aspect ratio employed by video ads in other media. When a user clicks on that image, the video runs over 75 percent of the computer screen.

Excite@Home charges $30 to $70 CPM for video ads — the same price range as its other advertising, Bratton said.

"We make it as simple as we can," she said.

Excite@Home plans to extend its research to determine which rich-media ads work best, Bratton said.

"In the past, we took seven to eight advertisers, created both narrowband and broadband ads and compared the take rate and what people thought," she said.

Excite plans to create three or four types of video ads for about eight advertisers to see which are most effective, she said.

Looking at the big picture, content providers don't view streaming advertising as the last-ditch attempt to make Web advertising work. Rather, it's a natural stage in its evolution.

MSNBC.com editor in chief and senior vice president Merrill Brown said the Web's major news sites — MSNBC, CNN Interactive, ABCNews.com, ESPN.com, WSJ.com and CBS Marketwatch — generated $1 billion in revenue last year.

"If you compare those numbers to the same categories in cable at the equivalent point in cable's history, there is simply no comparison," Brown said. "With audiences the size we're drawing today, it's inconceivable to me that we won't make a lucrative, effective advertising medium out of this great start."

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