Continuing the hit parade of A-list actors making their foray into the online video world, former Friend Lisa Kudrow will be starring in “Web Therapy,” a branded entertainment effort for Lexus.

Unlike the “Smart Girls at the Party,” with Amy Poehler, introduced last week by ON Networks, Kudrow’s series is conceptualized, created and delivered by the brand. Sandy Blanchard, owner experience manager at Lexus’ marketing division told the Hollywood Reporter that the luxury cars will only be woven into the stories “when relevant and appropriate.” That said, there were no additional syndication partners mentioned, leaving us to believe that users will have to visit the L Studio to take in the show (and the brand), or rely on folks like us to embed it for you.

Oddly, she also told the HR that, “We kind of look at ourselves as a broadband HBO.” But as previously mentioned by OVW, HBO is broadband HBO.

UPDATE: I received an email from NeuLion correcting the information contained in Mel Adler’s email. NY & LA sales offices are still open, and Mel is no longer an employee of the company, and was not an employee at the time he sent the letter. NeuLion and JumpTV are still very much in business, and in growth mode.

In a letter to not-sure-who, Mel Adler sent the following note:

As some of you may now know, JumpTV/ Neulion decided to close their advertising sales offices in NY, LA and Chicago last Tuesday. Until further notice, please direct any sales inquiries to their Sanford Florida office at 407-936-0800.

Over the past year, working with so many talented online media professionals has been one of the most fulfilling experiences of my career. So, thank you all!

When Jump decided to insert advertising into its paid subscription streams last year, there was little research with regard to audience acceptance and possible churn. What evolved was a state of the art, in-stream marketing experience. At our height, comScore ranked JumpTV as the most engaged video sports site, reaching 3-4 million monthly uniques (don’t get me started on video measurement panels). For perspective, four million people is about how many the Yankees draw to the Stadium in a season. And although I have no delusions about my two loves - baseball and streaming media, becoming equally popular, it’s still a nice coincidence.

I look forward to working with each and every one of you again in my next ‘Excellent Adventure’

Session Description:
When will supply of premium inventory become outstripped by demand? What effects will this have on the online video marketplace? Some advertisers would argue there is a glut of quality, premium inventory online. Some would say there is almost infinite inventory. Who is correct? Can premium video actually command a premium on price? Are video ad networks killing the price and creating a low cost marketplace for video that hurts the chances for growth? These will all be discussed in this session.
Moderator:
Jason Glickman, CEO, Tremor Media
Speakers:
Steven Comfort, YuMe, VP, Advertising Sales
Carrie Kelly, VP Ad Sales, Funny Or Die
Christine Peterson, VP Digital Media Director, Carat
Shoba Purushothaman, CEO, The NewsMarket
Lewis Rothkopf, Network Development, Brightroll

A: Peterson: The question isn’t whether or not it was produced by a professional company, but whether or not there is a technology to alieviate their fears of being associated with pornography or inappropriate language. They don’t really care about the resolution of the video.

Q: If the content were determined to be safe, would that warrant a higher CPM?

Peterson: Sure. If we could have the same reach, then yes. A consumer may be even more passionate about that content.

A: We also need to look at things in the broader context. The super-premium content is usually a byproduct of a broader TV deal, and not really a true measure of CPMs .

Christine: Some of the models for super-premium content is built around purchasing a block, as opposed to the majority of digital content which is purchased on CPM or per stream basis. While that sounds nice, it most cases, they are just repurposing their TV spots. We’re seeing frequency of 7 exposures per session, not just when they come back. We’re looking for 1-2 impressions in an in-stream environment. Overall, those super-premium buys have a negative impact. As someone who tried to catch up on a season of 30 Rock, I hope I never see an ad for super scrubber again.

Glickman: Publishers need to balance the frequency capping with their ability to make money.

Q: From a supply and demand standpoint, there is a lot of noise that all of the video inventory is UGC. When you look at the volume of video inventory on tier-two sites, often times it exceeds what you can find on top-tier sites. What is the roll of video ad networks in a supply demand and value?

A: Brightroll: You can’t possibly overstate the value of video ad networks in this environment. The goal is to supplement what the publisher is doing on their own, and help the agency get the buys across a broader array of quality publishers while avoiding the pitfalls that comes with trying to do that. But you’ve got all of these different player types, formats for them to deal with. As far is the publisher is concerned, you get very competitive CPMs, but not what you’d get if they sold it themselves. But what often happens is “The Spitzer Effect.” You get a huge spike in traffic, and then you have a ton of unsold inventory.

Carrie: As a publisher, there is a need for ad networks. When we did the Paris Hilton video, we had a 16x spike in traffic. But nobody has the chance to pre-sell something like that. What we need to figure out is how to have something in-house that we can use to take advantage of that, and work together to increase the efficiency. We need to open up the dialogue on how the publishers and agencies can work together.

The behind the scenes is that we have to think about the end user. As a start up, we’d rather sacrifice some revenue to make sure that user comes back to us again. We want the right brands because we are building an audience as much as we are building the site.

Q: Are video ad networks hurting the CPMs?

Glickman: I think most of us would disagree with that. For standard ad networks that may be true, but not for video.

Brightroll: The people who run the video networks have been there before, and seen what happens. So we are determined as both former publishers to not go down that road again. We only sell on a CPM basis to make sure that CPMs don’t go down.

YuMe: We give our technology to the publishers we work with, and 99% of the time it is better technology than they already have. And that gives their sales team the ability to sell formats and analytics that they couldn’t deliver on their own.

Q: When it comes to formats, price and inventory, formats obviously play a role. How do we see the formats play into the conversation?

Carrie: On the day I started at Funny or Die, we said that there will be no pre-roll on our site, ever. We have to go back to the user experience. As Christine said, she was so annoyed that she’ll never buy a product. So we need to keep the user in mind and how we protect that experience.

Christine: Just to play devil’s advocate, the advertisers spend an enormous amount of money creating a :30 second spot. Not to say that it is the end all and be all, but they are still working. They still drive a brand message, equal to and above the performance on TV. Users are less annoyed than they are with TV, and we don’t see TV changing their ad model. When I say to an advertiser, “I need you to spend more money for the web,” they say “Forget it,” and spend the money where they know it is working.

Brighroll: One of the things that is really tense right now is the :30. In terms of branding and recall, they are the most effective unit out there. So you have the opportunity to do more than repurpose what you’ve got on TV. If you are targeting techies, they know the benefits of having more RAM, so you can exploit that opportunity to spend the time with them because you can deliver a much more targeted opportunity.

Christine: Coming from a media buying perspective, there’s only so much you can do and say to get them to test the waters in the space. Now we’re seeing interactive video, and we can create ad units for the space. But we need to create more case studies to prove that they work.

Q: How do we feel about formats as they pertain to the content? YouTube said they wouldn’t do pre-roll but would do overlays.

Christine: its less about who created it and more about length.

YuMe: The biggest problem is seeing a :30 second ad before a :15 second piece of content. But it is rare that we get more than one piece of creative. But technically we have the ability to do that.

Q: If you can create content that is an ad, but also something that is content and can stand on its own, is that something we see as the next big thing or is it a fad?

Carrie: It will continue, but it is really difficult. If you, the publisher, are doing everything from the script to the talent to the editing, then we are playing the agency, the producer and the publisher and then we need to go do the distribution as well. It’s a lot easier, like with the Dove campaign, where the agency did it, and seeded it. We can’t try to trick the consumer.

Brightroll: Trailers are a great example. They are entertainment, they are high def. There’s a burgeoning market for literary trailers, where they hire actors to create a commercial. Its entertainment that meets everyone’s need at once.

Q: Content doesn’t exist just on one site anymore. How does syndication, and hyper syndication, affect price?

A: YuMe: When you look at the widget world, where content appears on a blog or on facebook, the issue will become addressability. Can you tell who I am?

Q: Do top-tier sites warrant a higher rate than the same content farther down the tail?

Carrie: yes. If you can buy a targeted audience, if you can buy them in that bullzeye, then you should pay a premium for reaching them in a premium environment.

Brightroll: If you are having your content associated with premium, adjacent content, then you should pay for that association. But advertisers don’t necessarily see it that way.

Why?

Brightroll: One is safety. Advertisers pay to be associated with your brand.

YuMe: Demand and true scarcity will play a huge roll. Auto content, business and finance, travel, that will support higher prices across the board.

Q: With regards to TV, there is a comparison of CPMs. In general, people think that online CPMs are higher than TV. Should they be?

Christine: No. We don’t have the metrics to prove that we should pay higher prices for online. But you can’t compare them. Broadcast buyers buy cost-per-point.

Brightroll: Broadband should always be higher CPMs than TV. You have a lean forward audience. On TV, you have a cost-per-maybe. On the interactive side, someone is actively engaged.

Glickman: We’ve heard that the CPMs on TV have been watered down to address that cost-per-maybe.

Q: Is it an issue of education?

Peterson: Maybe, but what we hear from TV buyers is that they turn on the TV faucet, and the sales come in.

YuMe: When I worked in TV, we knew that we’d get exactly how many number of calls into a call center, exactly what time the spot will air. TV can be extremely precise. But when you are looking at an ad that is in a video player, you are waiting for that content to play, and you are very engaged. With TV, the push has been on to move away from show ratings and towards commercial ratings, and that cracked about two years ago. They are getting close to figuring out who watched the ad vs. who watched the show. But if you are on the Web, you are one click away from engaging with the advertiser. On TV, you have to get up, turn on the computer, etc., You are much farther away from that engagement.

Audience Q: What about convergence when TV and the Web come together?
Brightroll: All of the set top boxes run off of basic IP video. But there is no barrier to getting the same kind of ads and metrics off of the living room TV than off the computer. The technology is there. The convergence has happened. Its just a matter leveraging the data.

Audience Q: What goes into CPM rates, and why are they so much lower for UGC? What are the other inputs?

Christine: There is definite value to the body of content that we can trust. A lot of the established rates for the super premium placements happened because they were bought by broadcast buyers without being negotiated. They were set without any real rationale. There is also a lot of value added research that can help you prove whether or not something worked. With a lot of the premium content, you can do a lot more than with UGC. You can brand the entire environment if you’d like, which has a much longer impact than a UGC environment.

Is the flip side of better ad targeting a nosier, intrusive marketer who knows more about us than we care to share? It seems clear now that digital media must confront and resolve its natural tensions with privacy and security concerns before the industry can move forward. The weird science of behavioral tracking now snoops into our browsing, search, shopping, e-mail, and perhaps even online social network habits and physical location. Microsoft, Yahoo and AOL are consolidating networks and technologies in order to link together many of these user habits into deep profiles that allow precise targeting with scale. Have private companies ever been entrusted with so much information about private citizens? Despite industry assurances that personally identifiable data are not involved, marketers now have privacy advocates, the FTC, and legislators taking a hard look at whether a new age of marketing science requires new levels of regulation. What hurdles will the industry need to vault? Could digital marketing really survive if the fully opt-in system that many advocates propose is adopted? Are the best laid plans of marketing science going to hit a wall called privacy rights?

MODERATOR:
Wendy Davis, Senior Writer, MediaPost’s OnlineMediaDaily
SPEAKERS:
Eileen Harrington, Deputy Director of the Bureau of Consumer Protection, Federal Trade Commission
Jeff Hirsch, President & CEO, Revenue Science
Frank Pasquale, Professor of Law, Seton Hall Law School
Ari Schwartz, VP and Chief Operating Officer, The Center for Democracy and Technology
Mike Zaneis, Vice President, Public Policy, Interactive Advertising Bureau
Q: For years, BT campaigns have collected data anonymously, and used it to serve people ads. If it is anonymous, whats the problem?
A: Ari: We don’t consider it to be anonymous. If you have data about someone over time, that isn’t anonymous. The consumers show interest, and the debate is about how much data is being collected about them.
A: Frank: The tailoring of the user experience is important. Users want to know they have control over what is being collected about them. Users should have a persistent opt-out opportunity to maintain privacy for as long as they want.
A: Mike: There is a danger in collected info about people. Just because you can track someone over time doesn’t mean that its not anonymous. If it is not trackable back to a specific individual, there is less to be concerned about.

Q: Aren’t there instances where people who have been identified?
A: Mike: Yes, but lets not brand an entire industry because there is a potential for that to happen.
A: Hirsch: The debate is about what is PII and what isn’t. And that’s where the line is.

Ari: But you are taking your business model and applying it to policy. I’m suggesting that there are business models that definitely have something to fear. And that’s where you start to run afowl of the benefits of interactive media.
Q: Who owns the data? And does it matter from a privacy point of view?
Hirsch: Who owns it is partially a business issue. Whoever created the data should own it.
Eileen: The issue is also about control, not just privacy. The issue in the policy arena is that the facts are obscured. Congress and the FTC have continued to try to collect really good factual information about exactly what is being collected and how it is being used. Businesses that do this are obviously reluctant to be forthcoming in ways that have been meaningful. And the practice is constantly changing. Trying to define what is PII is a red herring. We just want to know what is being collected, how it is being used, and how it can be combined with other data. Those are the questions. The longer the debate goes on without really good, candid, reliable information, the more probable it is that policy wont be made. There’s a game of chicken being played. The longer businesses refuse to come forward, the more likely it is that policy will develop that people will complain about.
Frank: but there is also an issue about what is information and what are business and trade secrets in order to conduct business. There needs to be a lot more computer scientists and engineers in order to get at the guts of this.
Eileen: The FTC has a pretty good record for maintaining the confidentiality of trade secrets.
Mike: The process the FTC has undertaken has been the right one, and has been very deliberative. Private meetings and town halls have been a deliberative process, and been focused on what the business model is and what is the right approach. We get in to trouble when we start to speculate what might be possible in the future. There are a lot of things that are possible in an open-architecture environment. We need to focus on what IS going on vs. what we can imagine in our wildest dreams.

Q: But who would have imagined that AOL would have released search data?
Mike: But people knew they were collecting it. They just didn’t expect that it would be released.
Jeff: My mother didn’t understand that AOL was tracking all of her searches.
Ari: its about user control. If you run a business model that is counter to user control, policy makers will look into it. I’m not picking a winner or a loser, that’s just the reality of the process.
Eileen: There are types of information that are very sensitive, like searching for information on health conditions and then serving ads against it. I don’t think that most people know much about how data is being collected and used, or that it is explained clearly in a privacy policy. The difference between online vs offline is the volume of data, and the potential of aggregation that simply isn’t possible offline. What has changed since we started looking at behavioral targeting? Everything. The volume, the usage, the techniques, all of it. This is a very juicy policy issue in Washington, and business models are going to develop in a way that give consumers clear notice and a meaningful choice or it is going to get dumped.
Q: There has been self regulation for years, so why are we still having this discussion?
Jeff: Not everyone follows the guidelines, and the new BT companies that leverage ISP data raised the issue again and proved that people weren’t following the guidelines.
Eileen: Meaningful self regulation means policing. There are excellent examples of meaningful policing. Most advertising policing is done through self regulatory policy with real sanctions.
Q: how do you sanction a company that says it isn’t going to follow that self regulation policy?
Eileen: If companies don’t comply, then we take enforcement action.
Frank: I have a lot of worries about self regulation. There are a lot of opportunities for a bottom to happen.
Eileen: The reason it makes sense, if it worked, is that the technology and practices change so quickly that the policy to regulate will be static and out of date.
Ari: We’ve had 8 years of self regulation, and we’re still having these problems. We’re going to need a backstop legislation. If we can get at a self regulatory model, and back that up, we’ll be much better off.
Mike: We have that already. We have that around email and children’s spaces. But it is a harm based model, and we haven’t come up with a definition of harm. But the industry recognizes that we have a relationship with customers, and we need their trust in order to have a business. That’s why we need a broader initiative than just the NAI.
Q: how do you compete with companies that don’t follow the practices?
Jeff: We see business models where the data is being used without a publisher’s knowledge. But that is a business issue, not a privacy issue.
Q: Does the technology involved change the standards? Does ISP targeting require different policy?
Mike: The same piece of data in the hands can be tracked back differently than if it is in the hands of another company.

We have the technology. We have the platform. We have the audience. The promise of digital technology for marketing is to benefit all links in the value chain. Tracking consumer wants, needs and behaviours will target them with fewer ads that are so relevant as to be more useful than intrusive. Publishers will realize the true value of their context with heartier CPMs that reward target-rich, well-lit environments. And digital media will knit these audience pockets together in networks that offer marketers necessary reach and scale with none of the waste of less accountable platforms. This perfect eco-system of digital media will deliver right-message, right-time, right-place marketing that serves all constituencies. Is marketing utopia just over that next ridge? Or is the “perfect eco-system” actually delivering reduced ad budgets that cannot support current marketing infrastructures or continue to underwrite good content?
MODERATOR:
Randall Rothenberg, President and CEO, Interactive Advertising Bureau
SPEAKERS:
Margaret Clerkin, Executive Director, MindShare Invention
Russell Fradin, President, Adify
Gian Fulgoni, Chairman, comScore, Inc.
Eric Wheeler, Chief Executive Officer, 33Across
Dave A. Yovanno, Chief Operating Officer, U.S. Media, ValueClick, Inc.

Q: Is targeting helping or hurting our industry?

A: Are we really delivering targeting the way we claim we do. There’s a lot of room for improvement.

A: ValueClick: Currently, it is hurting the industry. Targeting should bring more dollars into the online market place, but what it is actually doing is allowing advertisers to cherry pick.

A: Mindshare: One of the issues is around who actually owns the data, who is using it, and who is gaining the knowledge. The advertiser is paying for that, but the knowledge is also being gained by the publisher, who is using it to sell to other advertisers to the benefit of the publisher. There are advertisers who believe that the data belongs to them, and should be portable.

A: There are issues around cherry picking, but behavioral targeting allows us to analyze social networks like never before, and it’s the data that marketers have been craving for.

A: Adify: It’s a continuum. Without all the targeting, we probably don’t have an industry like we have. But you can’t just look at the targeting part of the equation. But it is very hard to deliver mass scale of micro targets. For any individual publisher, it is dangerous to get too targeted. If you are trying to target someone who traded a quarterback for a running back on their fantasy football page, you are going too far.

Q: If you look at the world of publishers and marketers, who is really benefiting?

A: comScore: If targeting was working the way we think in terms of accuracy and benefit, I’d think that what advertisers are willing to pay would be much higher than we’re getting. Ad networks should be able to charge much more than a single publisher. Targeting raises two promises to an advertiser. 1) I promise that I’ll deliver the audience that I’m selling you , and 2) I’m getting something significantly better than non targeted advertising. Direct response advertisers have an easier time of measuring that return. That’s much more difficult for brand advertisers.

Q: DR and branding used to be looked at completely separate entities. Are they coming together? Is there a blending?

A: Mindshare: Its definitely blending. No agency has just a single objective. So you need to be strategic about moving both or multiple objectives, and you need to allocate your dollars to do that.

A: 33Across: Being performance based is the only tangible metric that you can feed to the higher-ups that is measureable. Advertisers will pay a premium to have their brand associated with specific content. If their objective is DR, then they can turn to a network.

A: ValueClick: We’re seeing a widening of the gap in CPMs. The premium branded sites can still command a premium CPM, but there is very little going on in the middle. Thanks to social media, there is a driving down of CPMs. We’re seeing clients with their budgets in two or three chunks to spend against different objectives.

Q: Because social media is designed to engage people at extended periods of time, why isn’t it seen as beneficial for branding?

A: The way social media is structured, there is a titanic amount of inventory. It has nothing to do with the page views in social media. When you translate that to a CPM, it becomes miniscule on a pure CPMs. We are awash in low CPM inventory because a lot of social sites have a frequency of 10 million.

A: 33A: that is absolutely right. We’re moving away from marketing to customers to having conversations with them. Its not that social media is bad, its that we’re using the wrong metrics.

A: Mindshare: You can advertise in social media. But you need to find the people that will engage and influence other people.

A: 33A: We built ad systems for scale. How many of the IAB standard sizes are good for having a conversation with an audience.

Q: Are CPMs no longer an effective way to sell online advertising?

A: comScore: No. You don’t expect an immediate response from an ad in a magazine ad. To big brands, the things that are important are how many people am I reaching and am I influence them. If we want people to move money from traditional media to online, we need to give them the proof. If you show them a 2% click-thru rate, that isn’t going to happen.

A: 33A: You need to have some form of currency for people to trade on. For marketers with savvy, that doesn’t really matter. All advertising is held to some action globally, no matter what the pricing model is. In the DR world, there is either a sale or a lead. What is the equivalent in a branding model? That’s a much more complex question than a pricing model.

Q: Are you finding that you are customizing objectives for each individual client?

A: Mindshare: You have to figure out your clients objectives and the action that you want the user to take. You can do performance based deals with large publishers, but we aren’t going to move to one or the other. It isn’t black or white. If your goal is to increase your reach, that is going to be sold on a CPM basis.

A: ValueClick: This is one of the most self-loathing industry, but we’re the fastest growing advertising medium every. And we’re the only ones making money. But there are two kinds of fragmentation that hurts the business. The fragmentation of publishers makes it impossible to plan, so you need aggregation. The other is to date, advertisers have been able to get a return with nearly every new technology or method to do something. The media planners are deluged by all of these options.

A: A:33: Peter Naylor had something interesting to say. When you sell a deal on TV, you get high fives. When you sell a deal online, people say, “You sold that?” and then need to figure out if they can deliver it.

A: Mindshare: There is a lot of attribution given to search that isn’t rightfully there’s. There is a lot of research being conducted right now that is going to dramatically change that.

A: comScore: If you look at the consumer electronics market, you need to look at latent data for 90 days before you will see a conversion and that’s just online. 70% of the conversions happen offline.

Since 1980, the advisory role of Madison Avenue has declined. The advertising industry in general has failed miserably at responding to the challenges of the digital world. There’s been a decline in advertising as an overall portion of marketing spend.

The digital world has introduced a new set of nomenclature that has confused the landscape. Google has been an innovator, but the industry as a whole has not. The whole industry is looking down the battle of a gun. However, the financial crisis is putting new pressure on our industry. There are a finite number of possible futures or outcomes.

“There is a quiet revolution underway, led by the world’s most rapidly developing economies…The internet is driving that progress.” – CEO, Sun Microsystems.

Web 2.0 is in its early stages. But there are some significant macro-trends happening that will fundamentally change the world we live in. Digital technologies are disrupting the way we communicate. The world is interconnected, interdependent, and needs to be transparent.

More and more companies will look for alternative sources of income. Advertising will play a key role. There is a rise in “Free.” The platform wars are about control of the future of the world economies. Advertising agencies are under resources and under capitalized.

Transparency and consumer control means that “now the deer have guns.”

The consumer controlled world that we’ve created has provided too many choices for all of them to be sustainable. The media environment is constantly moving, constantly in flux. Its like a pinball. The ball is constantly moving around, bouncing off person to person. People are constantly talking, and want and need the brand when they want it, not when we want to talk about it.

Brands need to look at themselves as a service, not a product. One way to do that is through digital media. What you do as a brand is more important that what you say. Brand band business behavior is becoming key. And doing what you say you do is critical. The brands that will win will be the ones who’s consumers tell the best story, not the brands that tell the best story. You need to create communication that people want to spend time with.

We need to get away from campaign based thinking into continuous communication. Outputs need to be outcomes. Controlled communication needs to become organic communication. To accomplish this, we need to re-engineer our agencies. People need to think about how to integrate on a vertical basis, not horizontally. And this terrifies most agencies. But that is the challenge. They need to become much more efficient, and need to invest in the brainpower in our industry. Consider the idea of an “Open Source Agency.”

Session Description:
There are so many ways of creating, distributing and syndicating video online. We see large, mainstream publishers competing with smaller, upstart production companies to create video and some of it is better than others, but all of it is in demand by marketers. Media planners are trying to determine how they should value these different types of video content, how it should be priced, whether the premium content from large publishers is actually more valuable than these smaller production studios. How do we make sense of the landscape and the implications for marketers?

Moderator:
Doug Knopper, co-CEO and Founder, Freewheel
Speakers:
Dick Glover, CEO, Funny Or Die
Jim Nichols, Partner, Strategist, Catalyst:SF
AJ Vernet, President, KTV Digital Media

Q: Last month, according to eMarketer, there were 52 million unique video viewers last month. Where will we be in 12 months?

AJ: More than 100 million.

Q: What kind of content will it take, and what will it take us to get there?

Dick: Doesn’t think its content. Its accessibility, the growth of broadband and new platforms. I don’t think people aren’t watching because there isn’t content people want to watch. You need content to have a successful business, but content isn’t the obstacle.

AJ: Agreed. It is so easy to take a video and upload it to a facebook app.

Q: OK, what about monetizable content.

Jim: There needs to be a generational change. You can’t just count on young people to watch video. But it needs to be packaged in a way that advertisers find appealing. There is a lot of focus on “consumer control” but the consumer can’t be totally in control because they want everything for free. So the question is how to get companies comfortable with advertising on the type of content. But the industry isn’t packaging content in a way that advertisers find appealing. It also needs to be easy to buy. You don’t buy car that comes in 500 pieces.

Dick: Advertisers and marketers need to find more effective ways to engage with these audiences. They need to structurally figure out who is doing it – is it the interactive agency? The brand agency? The PR firm? You end up with a worse product because it has to go through so many hands. It needs to be much more integrated on the client and content side because it is too difficult.

AJ: Publishers need content. Advertisers don’t know how to package branded entertainment for publishers. Advertisers want a product that is completely made for them. But the biggest obstacle is that the person who is buying the media just doesn’t understand it.

Q: Is it because the content is different?

AJ: 10 months ago, they didn’t understand the model. They couldn’t only think in terms of putting their TV commercial online. Now they understand it, but it is hard to price. Branded content can cost $100k, $250k, $500k.

Dick: Every day it gets a little easier. One of the problems, though, is that people “our age” our trying to communicate with people our children’s age. In the 80s, it was really hard to sell cable TV. And still today, the same commercial to the same audience gets fewer dollars on cable than broadcast.

AJ: If the content sucks, it isn’t going to get views. It isn’t going to do its job.

Jim: Ultimately it doesn’t matter if they like the commercial or content. It matters if it moves product. People aren’t going to seek out “toilet peper” videos.

Q: What systems are missing from the equation?

Jim: Right now, there is a Google video widget that lets you search for political content. So you can find every video of candidates talking about political issues. An advertiser can look up by context and insert advertising against keywords. One of the things that you both do is create brand safe content. But that “safety sells” idea is going to need to get much broader. I’m not saying that all content is going to be good for all brands.

Dick: There is a level of hypocracy that drives me crazy. There was a brand that sponsored a movie that was rated R, but wouldn’t advertise on my site. That’s ridiculous. Advertisers are too scared of the negatives. But nobody ever got fired for making the safe choice that didn’t work. Intelligent risk is a good thing.

AJ: You have to give consumers what they want.

Q: What is the difference between the value of content on your site vs. the value on YouTube or Veoh or anywhere else?

AJ: People are starting to get more risqué because users are being desensitized.

Dicl: There are some differences between “on site” vs syndication. But there is also the difference in the environment that the ad exists. People don’t come to just one spot to watch all their video. Our site will always be a premium site. And we have plenty of UGC. But we have an environment that people know will be funny. Its not all just sophomoric humor that someone shot in their college dorm. The issue, in the end, is how you connect to massive consumers that will determine the value of the ad.

Q: What is the rev split?

AJ: 10% on our site, 90% through syndication.

Q: Can you comment on the Google/Seth McFarland deal?

Dick: its something that people should watch very closely. It all depends on the content, but there’s no reason to doubt that because of his history. It’s a smart deal for both sides.

Jim: The deal sounds like it makes a lot of sense. That one seems to have all the fundamentals that you’d ask for in a deal like that.

Putting your content anywhere and everywhere your audience may travel has become the mantra of publishing, but how true is that for video? As medium sized publishers watch Hulu, ABC and CBS pursue various flavors of hyper-distribution strategy for their video, should other publishers follow suit or establish more controlled distribution schemes tailored to their own particular content and partnerships? And what are the promising business models around syndicated video. Who controls the ad space when your video property leaves your site?

Moderator:
Gary Gannaway, CEO, WorldNow
Speakers:
Chris Allen, VP, Director of Video Innovation, Starcom
Mike Henry, SVP, Veoh
Eric Hadley, CMO, Heavy.com
Patrick Keane, Executive Vice President & Chief Marketing Officer, CBS Interactive
Rebecca Paoletti, Director, Video Strategy, Yahoo

Online video right now still smells like an online media buy more than a traditional or broadcast media buy.

Rebecca: We’re always up against TV budgets. eMarketer took their spending estimates down a few weeks ago. But we’ve spent the last few months focusing on helping TV buyers understand that there is a TV like experience online, and help them understand the metrics that we can provide. If we can get the TV buyers to move just 1% of their budgets over, they could make a dramatic impact on the industry without making too much of an impact on their overall marketing.

Q: Does the money need to come from TV?
A: yes, yes, yes.

Q: What are the challenges to convincing them to spend the 1%? And whats the solution?
Rebecca: Education about the online video experience. Is it porn, is it UGC, is it a well lit environment? Is it a quality experience? TV people still think the online viewing experience is poor. We also need to educate them about metrics and buying, which is very different to them. CPM, CPC, CPE, and what is the value for that engagement? Showing the value online to TV people is the challenge.

A: Scale is the one impediment that is going to change over time that TV people will respond to. Also, understanding what works is the most important thing. In a video rich environment, how do you have to think differently about marketing to them? Stretching the definition of what the video marketplace is presents a challenge as well. We can’t compare them to what the audience looks like in a linear world. On syndication, we have the opportunity to talk to marketers not just as media buyers, but as content partners. They are learning that they can target content the same way they can target advertising.

Patrick: Advertisers need to understand that online video isn’t just “dog on skateboard.” Cost is also an issue for TV buyers. We’re talking $15 CPMs vs $30 for premium online video. Often times you are dealing with a buyer who is looking at GRPs and simple costs. Advertisers also don’t want to buy the same audience three, four and five times. So measurement is an impediment right now.

Hadley: Explaining the CPM & GRP issue is critical. Helping them create advertising and content for the web, rather than repurposing TV is key. You need to understand that it is a different experience and different mentality.

Q: We are in a marketplace where we don’t have budgets. What needs to happen to get video to scale? Does everyone need to get together ala Walmart? Where will we be 5 years from now?

A: Users are going to migrate to the destination where they can find the broadest range of content and have the best experience.

Patrick: It depends on a lot of issues, one of which is navigation. If the economics are right and the partnership made sense, things could be different. But this isn’t “Free Lunchville.” At Google, we spent a lot of time figuring out how to help people find content. On TV, we’ve got a remote control. There needs to be much better navigation for discovery. But discovery of a great content experience with online video isn’t there. I’d love to see the metaphor of search apply to video on TV as well as the Web.

Rebecca: With video, we don’t see the same billions and billions of page views like we do with text based pages. When you look at where people watch video, they all have their favorite destination, and that is because they believe that they will be able to find the content they are looking for will be there.

Hadley: There are a lot of different ways to find things. If you ask a 10 year old, you’ll get a very different answer than if you ask a 30 year old. The phone will be a big part of it. Convergence. It is going to be a different generational mentality.

Chris: Reach, scale and measurement are the biggest barriers. People buy TV for reach. Until there is an easier way to get that reach, people will still buy TV. On measureability, I’d like to be able to buy by demo, like I can on TV. There is a complimentary effect with online to TV. If CBS skews older on TV, we can get younger viewers on CBS.com. Also, people expect a certain type of content from the providers. If you want to watch Grey’s Anatomy, you go to ABC.com. Swingtown didn’t do very well because it wasn’t a “CBS” type show.

Session Description:
In a sluggish economy, when budgets must stretch, will marketers be more willing to roll the dice on running ads in questionable places? What are the pluses and minuses? What strategies, checks and balances should they have in place with regard to their agencies and networks? This panel will debate the things you’d do today, and those you’d have never done four years ago. A discussion of the learning, the pros and cons and how this economic climate is shifting media thinking.
Speakers:
Sarah Baehr, Vice President-Media, Avenue A Razorfish
Jordan Bitterman, Senior Vice President, Media & Content, Digitas
Steve Mitgang, Chief Executive Officer, Veoh Networks
Ross Sandler, Senior Analyst, Global Internet & Media Research, RBC Capital Markets

Q: What are the differences in expectations right now, given the environemnent?
A: (Julie, replacing Sarah Baehr) – A lot of the tactics are still working, so clients are sticking with the overall strategy. We haven’t seen the huge cuts yet, but they are shifting to more efficient tactics. We’re setting expectations that the ROI isn’t as strong as is was, or as it could be, because we’re being scrutinized a lot more.

Steve, Veoh: From a DR perspective, the budgets are going to get hit. In the video space, which is incredibly nascent, the opposite is happening. Its an experimental market right now, and brands don’t want to sit on the sidelines and miss the opportunity.

Q: Is it the same dynamic as the early days of search?
A: yes. Its better to be playing in the space, learning which levers to pull, making mistakes, which gives them a tremendous advantage. A brand that understands the creative, the interactivity, the flighting, etc., isn’t something you can get by reading the WSJ.

Q: Google has had tremendous difficulty figuring out YouTube. How comme they can’t figure it out? Are there structural issues? Is it premium vs USG? Lack of inventory?

A: Jordan: You are seeing things that are more ‘long tail’ than what people who are used to buying traditional broadcast are comfortable with. You are seeing less of an interest to get in there with big dollars. In today’s “flight to safety” there’s less of a push. The more digitally savvy brands are starting to play with it. But its more of a question of what to do in that space. Do you run your TV spot, or do you create custom content? Instead of being adjacent to content, you can actually be the content. But that is more expensive, so there isn’t as strong a push to do that right now. I’m surprised we don’t see more dollars in this space right now, but that will take off in the next 18-24 months like a hockey stick.

A: It is really hard for a marketer to create a meaningful form of engagement when you have what is essentially a two minute experience. We found that most YouTube videos were 9 seconds or less. What is the ad unit that you run around a 9 second piece of content? That’s YouTube’s structural problem. YouTube isn’t any more risqué than MTV.

Q: (Jordan) Will we be watching content in 22 and 44 minute lengths? Or will we be watching more short form content?
A (Veoh): We’re actually shocked at how much long form content people are watching on Veoh.

Jordan: The logistics and development costs are a lot more complex for creating content. That is one of the fundamental problems right now.

Q: Standards. Where are we on the paradigm shift in getting to where display ads are today so agencies can rapidly adopt it?

Julie: We shouldn’t be there yet. Its too soon to say “this is the right way to do it.”

Veoh: We look at ad units as the structure of what you are buying rather than looking at it as the overall campaign. We know what a 5 second or 10 second ad looks like, but we need to still figure out what the real opportunity is.

Q: Content and Transparency. Where are we in figuring out where we are in determining what is safe? Can you scan a video clip and figure out the type of content?

Veoh: A few issues there. Is there enough reach? Is the content brand safe? We make sure that we’ve got a clean, well lit environment. “The great thing about porn is that you can see it.” Meaning, you can easily identify it and remove it. Our policy is to just not have any there. On the reach side, it is still small. But if you want to reach a 15-34 audience, or hyper fanatics that tweet and have 10 facebook sites, there is a lot of density of really important people to reach. You can’t buy tonnage, but you can but very important influencers .

Q: From an agency side, are you comfortable with the metrics?
Jordan: You are taking risks when you have a brand marketer that would load up their T&Cs with caveats with where they don’t want to run. You have to look for the kind of marketer that wants to go at things a little differently. Just like the web started with males 15-34, the same thing is happening with video right now. Over time, it is going to start looking more like the world in general, and will probably get there more quickly than the web, or ecommerce or broadband did.

Q: Production quality. Is a video clip of Walt Mossberg talking about the iPhone on his webcam worth $80?
Julie: yes. If it’s the content you are looking for and it delivers the audience, than yes, it is worth it.

Jordan: Years ago, there were three broadcast networks with three hours of primetime. There were limited options. Now if I want to watch Walt Mossberg, I’m raising my hand and saying “yes I want to watch that” whether it is grainy or two minutes or 20 mins long.

Q: The web is an active environment, TV is passive. Where are we with video search? Does the activity need to switch from active to passive?

Veoh: Search isn’t going to be the primary vehicle for discovery of video. It will be part of the process, but not the primary process. Clicking the remote control on TV is about trying to find something interesting to watch, but its not searching. Its browsing. Recommendation engines and algorithms with play a much larger role in helping the discovery process.

Q: Pre-Roll. Advertisers love it. Consumers hate it. How do you think about pre-roll and using it? What is working and how do you walk the line?

Julie: You need to be careful. With pharma clients, they want to put all the legal in the ad, so you can’t do a :15, you have to do a minute long ad. If it is really annoying to even think about, it is going to be annoying for the consumer. But there is a value exchange. If the user knows there will be value there, then its not bad.

Jordan: You always need to think about the context in which the marketing is being received. You don’t want to just sit adjacent to the content. If you can have message that is specific on how to activate the experience you just saw in or along side the content, that is very powerful. Its expensive, but can be very powerful.

Julie: Samsung has a great ad for one of their new phones that you can take part in the experience of the guy in the story. Do you go to sleep or go out? The user takes part.

Veoh: We’re dialing back the inventory for pre-roll to create a better experience for the user.

Q: Where are we with mobile?

Julie: We’re experimenting, but the iPhone is blurring the line between what is mobile and what is browsing the web.

Jordan: The experience that comes from an application that is served is much more powerful than just serving a banner. We’re shifting from a WAP experience to a Web experience. You need to give people an experience that users can participate in, and has engagement that you can track on the back end. We’re looking for the “Killer App” right now. We’re moving from a “one platform, one provider” environment to an environment that will deliver the killer app.

Julie: Hopefully we’ll stay out of an economic environment that stops people from experimenting.

Q: How are DR advertisers thinking about advertising in the economic downturn?
Jordan: You may stay away from branding initiatives that are tough to measure, but with DR you know what the ROI is, so we aren’t seeing a slowdown in that.

Q: How are you looking at targeting users vs. content?
Julie: There is a huge appetite for that, particularly in the ad exchange environment. But when you look at DR metrics, heavy reach leads to conversions. So it’s a balance.

Jordan: We don’t know what the ad exchange will be called in the future, but it will become completely partner, portal and network agnostic.

Q: How will that impact the ad networks?
Jordan: The publishers control the content and who they will allow to advertise to that audience. The future of the networks will depend on the amount of quality content that you have. If this “uber exchange” comes into play, I’d be making sure I have quality content to offer, more than just the breadth.

Veoh: There will always be quality content where there will be a premium placed on advertising on that content. But we are also all creating our own quilts of what we find interesting, and there isn’t enough of that to avoid targeting audiences. Advertisers are going to need to develop messaging that works in those environments. They aren’t going to find bigger and bigger places to advertise, they are going to find lots of smaller places to advertise.

My apologies for not having everyone’s name for the Q&A. Hard to keep up and type. Sorry!

Panel: Dot Bomb 2.0?

Moderator: Henry Bloget, Silicon Alley Insider
Porter Bibb, MediaTech Capital Partners
Warren Lee, Canaan Partners
Dennis Miller, Spark Capital
Satya Patel, Battery Ventures
Brian Sieser, MAGNA

Q: Was there a bubble?

Lee: Yes and no. If you want to compare the current situation to 2000, that was a funding technology bubble. VCs invested in companies that didn’t have business models. The allocation of dollars to IT companies has remained basically flat.

Q: Estimates are all over the place, and people are saying that “companies are toast.”

A: Anyone who is not making money is “toast.” Look at who has entered and exited the market. There are too many people chasing too few good deals. There is a limited market, and there will be consolidation.

A: you can argue that there is a VC bubble as well as you can argue that it is a VC cycle. There will clearly be a shakeout in the ad network market place. There are too many companies being funded in mobile relative to where the mobile market is. But that is normal for the nature of venture capital.

A: Companies that are fundamentally based on advertising are toast. There are too many companies that ignore growth opportunities from other sectors. Google made it possible for SMB to do things on a national level more efficiently than ever before. You put up a website and grew your business. Instead of hiring another sales person, you invest in SEM.

Q: I couldn’t think of a sector more ripe for being toast than ad networks. Who will admit to investing in ad networks?

Lee: I’m invested in two of them (Editorial Disclusre: Tremor Media is one of them). Today’s ad networks are very different than they were a few years ago. They aren’t just a remnant play for low CPMs. There is a percentage of ad networks that bring true value and technology and benefit to the market. All of the ad networks are making money. The networks that will be ‘toast’ will be the ones with significant overhead and can’t pay the bills and don’t deliver margins.

A: There’s a difference between making money and building equity. In order to survive, you need scale. Scale matters. There may not be any value in these companies other than their ability to sell in the short term. Networks need to ad more value than just an incremental penny on the eCPMs. The companies that have all the pieces in place will survive. The others will make money in the short term but not may build long term equity to justify venture capital.

Q: Is twitter hype?

A: (Spark, investor in Twitter) Very few companies have the potential to become a verb. If you look at the behavior of the people who use Twitter, you see a pattern among a certain constituency that strikes you as being remarkably robust. There is something very unique going on there. We’d be arrogant if we said that we fully understood it, but there is an ecosystem being built around it.

Q: How is it going to make money?

A: We didn’t think we were smart enough to determine exactly how to monetize it. But it was very interesting to watch politicians adopting it to monitor what was happening in the world. We didn’t think subscriptions would work. We weren’t arrogant enough to say it was the zeitgeist. We think it has the potential to become a verb, and become part of the vernacular, so we took that bet.

Q: People are blaming advertisers for being slow to realize that advertising revenue is being wasted on newspapers. But people have relationships, want to US Open tickets, want to go golfing. What can we do to break down the resistance to trying new platforms?

A: That notion is a crutch. If Twitter had a salesforce, they’d be buying US Open tickets for people, too. The issues are much deeper, much more systemic, much more rationale why this is the case. Distinguishing between cost and value is nearly impossible for a large advertiser. Also, the process flows for managing media campaigns is critical. You can take $100k and spend it on search, or build a widget, or PR. For a smaller brand, and you need to make an impact nationally, you need to start with the most effective way to reach the largest part of you audience.

A: You don’t get fired for buying advertising on NFL football. You get to talk sports, go to games, go to lunch. The same question was asked when cable TV emerged. People said, “Our brand is showing up on crazy networks like Discovery. Lets just wait.” It takes a long time for people to adopt and adjust to new platforms. Now the same thing is happening for the web. Advertisers have resisted new platforms from Day One. The hypocrisy and slowness that advertisers are moving into the medium is a critical problem.

A: Until someone creates a workflow that allows advertisers to evaluate cross media and figure out which medium works best, then we’ll continue to have these problems.

A: Eyeballs are key, and it is changing. There are enough eyeballs online to rival TV. Google has made online accountable.

A: Do you know how you get an invoice from Google? Fax!

A: Agencies need to go to advertisers and be able to explain to them what is happening in the real world. The second fasted growing ad medium right now is in-store advertising. The Wal-Mart network offers more reach than any cable network, and delivers provable ROI and moves products.

A: There are pockets of people that are taking advantage of what is going on right now. But it is complicated to get your head around everything that is happening online right now. But you still can’t get engagement and interactivity on TV. The brands who want to engage in a conversation with the consumer are the ones leading the way. But there are some inherent flaws in the way business has been done.

Q: Isn’t part of the problem with video that there isn’t a great way to advertise on video?

A: We aren’t going to get stuck with :30 ads. It is very early in the game. There are companies that are solving the problems of video monetization with technology. Freewheel and Tremor are doing very interesting things to address the issues. Way more people watched Sarah Palin and Charlie Gibson on the Web than on TV. There was a $21 difference in CPMs in the medium.

A: (Lee) We’re an investor in Tremor. Too often we see companies with strong technology, but try to forcefit a solution into an advertising model. With Tremor, they are tyring a lot of different things. Some will work better for different advertisers. Tremor doesn’t try to force any one solution. They offer a wide variety of formats and help agencies make the right choices, experiment, and figure out what works for them.

A: It is still the early days. YouTube is a cable channel that people will figure out how to sell.

A: People are also experimenting with other forms of marketing, not just advertising. If you look at the expenditures between the marketing expense line and advertising expense line, you see a dramatic shift in budgets. Money is moving into other vehicles.