Web stream of my speech at the Forrester Consumer Forum

October 28, 2008

Imagine my surprise to find out that one of the bloggers on the front row of the Forrester Forum streamed my keynote speech live. You can see the archive of the stream here. It begins with Carrie Johnson’s kickoff to the forum and then at about minute 11, she introduces my keynote. It’s not the best quality image or audio, but if you’re really interested in the speech, here it is in its glory.

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The global growth of online video vs. mobile video

October 20, 2008

I spend most of my time analyzing online video in the US (all of my datapoints on my FAQ are US only as well). But I get a lot of questions from clients around the world who share with me their anecdotal experiences, including juicy bits like:

  • In Spain, online video is spiking, driven largely by illegal downloading because there’s very little available through legitimate channels.
  • In European markets, even if they are next door neighbors, the behavior differs dramatically based on how much local-interest content has been cleared for online distribution.
  • English-speaking markets like Australia and Canada are less and less willing to wait for legal access to consumer American media. When Heroes hits the Web in the US, it gets picked up via BitTorrent in the rest of the English-speaking world. 
  • In Japan and Korea, online video is growing like gangbusters, in addition to high mobile video adoption.

This last one caused me to do some thinking because both mobile and online are growing at the same time. This is part of a bigger question, namely: Does online video ultimately compete with other video channels or complement them?

It’s a question that I have blogged about before when it came up among a panel of online TV giants in the US, but there hasn’t been a need to consider online video compared to mobile video, which is very immature in the US. However, globally, there are markets with a third or more of mobile users watching mobile video. 

I know from another global analysis that I did that when people in a country listen to music via their mobile phones, that listening competes with online music streaming. If one goes up, the other goes down. It was a comparison of 15 different countries where Forrester collects data (it is so cool to work here, imagine having that data at your fingertips). 

Nervously, I replicated the analysis for mobile video vs. online video streaming, and, wanna guess? They don’t compete. In fact, they correlate strongly (correlation coefficient: .57, end of nerd moment). This is the unique role of video in people’s lives. This is why OmniVideo is going to happen: more video, through more devices, in more places and times. Because we want more of it. Open the pipe and more will flow through.

Cool, huh? What’s your experience with video — either mobile or online — globally? Seeing some cool things? Feel free to share.


Will online video ads hit $989 million this year?

October 14, 2008

In October 2007, my very smart colleague Shar VanBoskirk, a principal analyst serving Interactive Marketers, authored our 5-year interactive marketing forecast. For the first time, she was able to break out online video separately from display ads and other interactive marketing avenues.

I won’t give away her hard-earned insight here beyond saying that in 2007, our forecast pegged the online video advertising business at $471 million, at least half of which — in my estimation — came from the 2007 advertising upfronts, where the networks aggressively bundled in online advertising to keep the broadcast ad numbers from flattening.

This forecast for 2008 put the number at double that — $989 million, close to the magic threshhold of a billion. Throughout the year I have been asked whether we think the assumptions of the model have held up. My answer is no: some assumptions fell below expectations and others came in above, chiefly: 

  1. YouTube hasn’t monetized its traffic effectively enough yet. This magic vein of cash has yet to be properly tapped. We saw an interesting interim announcement on how YouTube can add some cash through click-to-buy, but it’s really advertising that can bring in the dough once YouTube figures out how to make money without Viacom asking for all of it in the form of damages. Result: online video ad revenue not as big as you would hope.
  2. Online TV is bigger than expected. Remember, watching TV online is something that in 2006, only 10% of online video viewers did. By the end of 2007, it was 24% (see the report “What It Really Means To Watch TV Online”), a number we did not have in time to feed Shar’s forecast. Looking at the increased supply of online video — most of it from Hulu.com which increased supply both in amount of content and the breadth of distribution — that 24% number should double this year.  

The point is that even though YouTube didn’t come through for us, online TV has certainly more than made up for it, largely because the CPM on those shows is so awesome, ranging from $30 – $60 on a CPM basis. 

As a result, we stand by this number. As part of the validation exercise, I went through the following logic (which is summarized in the context of other valuable online video statistics in my Online Video FAQs):

  • In a typical week, 109 million hours of online video are watched.
  • If every hour of video has an average of 10 ads in it (video or companion banner), that means that just over 1 billion video ads are served each week, a run-rate of nearly 57 billion ads a year.
  • To hit our forecast of $989 million, the average CPM on the 57 billion ads run has to be $17.45 

The big assumption here is the number of ads per hour. For long-form content, 10 seems a tad high as a 45-minute episode usually has 6 ads. But add in another 2 ads for the whole hour and the possibility of a few pause ads and companion banners and the 10 assumption is reasonable. 

The real question is the CPM. For long-form content, that’s easy. For short-form content, overlay and companion banner ad CPMs can fall below a buck if sold as remnant inventory on an ad network. What do you think? Will online video ads hit this mark? Why or why not? What evidence do you have or signs do you see? I’m interested in your comments.


Engaged online viewers revealed in Veoh-commissioned research

October 8, 2008

As promised, I have some notes from last night’s Veoh Networks event where we debuted the research results from a study commissioned by Veoh and executed by Forrester Consulting, the consulting arm of Forrester Research.
See the press release on Veoh’s site for more detail on the study, which Veoh intends to release next week in its entirety after sharing it with its clients and partners this week. Big thanks to Edwin Wong at Veoh for leading the effort from his side. There’s also more detail from the SmokeJumping blog, posted by Brent Harrison who was also integral to getting the study going. From the release:

The study found that Engaged Viewers (viewers who watch more than an hour of online video a week) make up nearly 40% of all online video viewers and watch nearly 75% of all online video. Of these Engaged Viewers, those who spend the most time consuming and sharing long-form content:

  • Are more likely to watch videos all the way through
  • Pay more attention to online video more than they do TV
  • Interact with and rate the videos they watch more frequently
  • Are twice as likely to recall in-video ads and post-rolls than non-Engaged Viewers
  • Agree more readily that advertising is fair and helps pay for their free experience
  • Consider banner ads and ads that come in between videos (mid-rolls) most effective

The details are even more interesting, and I had the chance to share them with a group of content programmers, ad executives, and other online video enablers. It was a very worthwhile project, given that I could zero in on deep online video viewing behaviors that our own comprehensive Technographics surveys don’t usually allow me to probe.

Especially interesting was the set of in-depth interviews we conducted to supplement the 1,013 surveys. I learned a lot about how online video is taking over people’s lives from those interviews.

I can best summarize the mountain of qualitative insight with this single comment from a 42-year old participant who said, simply:

I can get what I want, when I want.

I couldn’t agree more.