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.

First Point: There is a flood of content.

Second point: people obsess over quality. Walt Disney made sure that the theme parks were impecably clean. Disney couldn’t be as successful a park without keeping it pristine. Hulu is the same way. The want to make sure that everything about Hulu is about quality. “We have heated discussions over every pixel. We’re very odd birds, and we know that, but that’s our version of street sweeping.” The details – important, but subtle – tell the users that there is something different at Hulu, down to the 16:9 thumbnails. Hulu is obsessed with quality.

Their mission is help people find and enjoy the world’s premium content when, where and how they want to. The rallying cry is more casual in tone. They want to deliver a server that users, advertisers and content owners “unablashedly love.”

First time user from Chicago, in user feedback, “My first Hulu experience made my head explode in a brain spray of awesome.”

Currently Hulu claims 8 million uniques, 119 million streams monthly. PC World Mag named Hulu #1 product of the year, ahead of the iPhone. There is tremendous advertising demand that significantly exceeded their plan, and Fox, a content partner, has seen their overall online business more than triple since the launch of Hulu just 6 months ago.

For marketers:

Take advantage of the unique power of the environment. For example, Hulu allow users to pick from three different ads from a brand, rather than trying to target the specific user. Let them decide. For example, instead of showing an ad for a sports car in front of sports content, let the user decide. Jason is a father, and actually in the market for a minivan, so the sportscar ad is wasted on him.

For entertainment clients, Hulu offers user a choice. You can watch a trailer or preview of a show as a long pre-roll ad, or the user can watch programming with the normal commercial / mid-roll interruptions. Again, giving users a choice about their experience is very much appreciated.

Be a part of a strong user experience. For long form programming, they start with a :15 second branded slate. A very simple execution. They are finding that the branded slate, plus companion banner, provide higher recall among users. The “Ad Load” on Hulu is one-quarter of what you’ll find on TV.

Leverage the power of influencers. Take advantage of people who are embedding content into their own content.

To conclude: First, there’s a big wave. Second, obsess on quality. Third, marketing.

For those of you who couldn’t make it, or had other things to do, or more likely just aren’t PR people, you missed a fun day at the PRSA’s Theory, Tactics and Technology Conference.

I had the pleasure of sharing a panel with Jordan Fischler, from Allison Partners (repping YouTube among other clients) and Doug Simon, from DS Simon Productions. The event also featured a keynote from my friend (and fellow BU Terrier) Peter Shankman, who never, ever fails to entertain and inform.

Even cooler, though, was meeting George Wright, from BlendTec, creators of the Will It Blend videos. How is it fair that I sat on a panel in a hot, stuffy room while he gets to blend a rake? Some people.

Unfortunately I had to get back to the office, so I didn’t get to meet Leslie Cauley, technology reporter at USA Today, or Saul Hansell, technology reporter for the New York Times, or Vishesh Kumar of the Wall Street Journal. But hopefully they’ll still take my calls and pitches.

The Democrats have teamed up with Move Networks to offer an HD Silverlight experience at this year’s National Convention which unlike NBC’s 2008 Olympics player, showcases the power of Silverlight as a platform.

Above: DNCC Video Experience Homepage Player

While the excitement of the DNC may not rival the Olympics, the player offers an awesome full screen 16:9 experience, two camera angles and a separate spanish broadcast, (though that one taps into Comcast’s lower quality 4:3 feed) leaving NBC’s player in the dust. If you’re just looking to watch the convention, look no further.

Above: DNCC Move Networks Player - Full Screen in 16:9 HD

If you’re looking for commentary and independent coverage, all the major online video live broadcast companies are partnered with most of the new media sources that have sprung up over the past four years and are now offering their own live feeds. The democratization of media is pretty cool, PaidContent and NewTeeVee have pretty good lists, though there are almost more independent live streams than we can count.

No real reason to post this other than The Star Ledger, New Jersey’s main newspaper, posted it with their review of Bruce Springsteen’s show on Monday night.

OVW is headed to Giant Stadium tonight with our cohorts from MediaPost to catch The Boss in action.

Actually, this does support Gannett’s investment in Mogulus, and shows how online video is changing the newspaper, and overall publishing, industries. No matter how good a writer you are, no music review compares to hearing the music for yourself.

In case you couldn’t make it, here’s what you missed. Presenters included Hulu’s Kevin McGurn, Move Networks’ Bob Bryson, Boxee’s Avner Ronen, MediaMerx’s Tejpaul Bhatia,and Matt Cutler from Visible Measures.

Four up and coming filmmakers will host live chats with fans during screenings of their films in the Independent Features online film festival tonight (Tuesday, June 24). The screenings take advantage of Lycos Cinema’s unique synchronous watch and chat functionality, allowing fans to ask questions and get commentary from the films’ directors while watching the movies together in real-time. Live “Directors Commentary” if you will. The top films will be shown at the Tribeca Cinemas in NYC, July 25-27.

The four filmmakers hosting “Director’s Take” chats are:

Racing Daylight
Directed by: Nicole Quinn
Director’s Take starts: Tuesday June 24th, 08:00 PM EST

Between Two Worlds
Directed by: Rodney Leconte
Director’s Take starts: Tuesday June 24th, 09:00 PM EST

A-Bo the Humonkey
Directed by: Frankie Frain
Director’s Take starts: Tuesday June 24th, 09:00 PM EST

Two For Three
Directed by: Matt Nye
Director’s Take starts: Tuesday June 24th, 09:00 PM EST

Be sure to check it out!

Today and tomorrow PdF2008 takes over Lincoln Center. Last year’s was a great event and this year the event has been expanded to two days and will be even larger. The UpTake will be live both days and Personal Democracy Forum’s Micah Sifry has been checking in live via Qik.

Above: The UpTake Live from PdF 2008

Above: Micah Sifry’s Qik Stream
And you can follow along on Twitter via the Summize widget below:

Moderator: Michael Learmonth, Silicon Alley Insider
Jane Hu, Vuguru (Michael Eisner)
Karin Klein, Softbank Capital
Warren Lee, Canaan Partners
Neil Sequeira, General Catalyst Partners

Michael: Are we in a bubble and how will it burst?
Jane: if we are in a bubble, there’s more bubbling to be had. There isn’t a lot of monetization in the space right now.

Karin: There isn’t a lot of money being made, so things will be sorted out over the next few years. I wouldn’t call it a bubble, per se. There needs to be a monetization strategy to keep the money flowing.

Warren: There is a bubble, but it will deflate, not burst. The video content companies like YouTube have been heavily funded. They will be challenges to them building a profitable business. On the infrastructure side, there is a lot of room for improvement in delivery of video and handling the load of content that is coming.

Neil: Not a bubble. But we need more companies that make this a “real business.” We need companies like Omniture. It all comes back to making money in the end of the day. As long as we continue to invest in companies that make money and help people make money, we’ll continue to invest.

Neil: In the first inning of a 9 inning ballgame, there was a clear winner. Google. They bought a premier site and will figure out how to monetize it over time. I agree with Warren that infrastructure is an opportunity, but people that deliver high quality content to audiences will be the winners.

Warren: The baseball game analogy is very appropriate. It is important to recognize that we are in the early stages. One of the interesting trends is how companies are starting to verticalize. They question is if that is a good venture business. There are companies that have potential to be a good business. We need to find companies that will be great businesses.

Michael: Are there great companies out there now? Would you put more money into Joost?

Warren: Raising a lot of money like Joost did allowed them to experiment, but it also enables them to not be very disciplined in how they spend it. There are lot of companies that have raised a lot of money and have gone away. There is a great deal of experimenting going on.

Karin: I’m not going to pick on anyone in particular, but we are very excited about companies in the content arena. Companies that do a lot of heavy lifting – like transcoding – are the ones who can be the winners because they’ll offer full service solutions to major media companies.

Warren: Given that there are so many new video companies that have been funded, and you need to understand what stage of development they are at to gauge their success. Companies that have a critical mass will have an advantage over newer companies because they will be more attractive to partners and clients.

Jane: We tend to produce a lot of content all at once, and sell advertising against it. Anyone can distribute content anywhere. The real key is figuring out how to reach the consumer. There has yet to be a real, true hit online. There is no Superman or Grey’s Anatomy. It is partially because we are in the early stages and partially that people don’t know there is original content online.

Michael: PromQueen was sold to TV. Is that a good exit strategy?
Jane: I wouldn’t say the goal is to upstream it to TV. It really depends on the content.

Michael: Are you funding any content companies?
Neil: Yes. We’re invested in Decca. They partner with great brands and then produce content. They have a bunch of niche vertical content that will continue to grow and find an audience. There are 20-30 different properties that do pretty well, with a few break out hits. But the business as a whole is very good.

Warren: We’ve looked at a lot of content, but our personal bias is that we like to invest in companies that have technology. Its been difficult for us to get over the hump and look at pure content plays. We have invested in technology that quantifies the value of content, but not the content itself.

Karin: We’ve looked at a number of studios in the video and gaming arena, but have passed.

Jane: We are invested in Veoh, which isn’t a pure content play.

Michael: The web shows aren’t really businesses yet, right?
Jane: Everything we do we try to monetize the best we can. It may be a while before we see a lot of return, but certainly a lot of our projects are profitable.

Michael: If there is a consolidation, who is going to go away?

Neil: There will be consolidation. If you look at the players and infrastructure and platform business, there is Brightcove and Maven and The Platform. Beyond that, there are a slew of companies that are venture backed. Those three have pulled away from the rest of the pack so far that there will have to be consolidation.

Karin: Some of the video advertising companies will probably consolidate as well. We’re also invested in Huffington Post.

Neil: Content and destination companies take a tremendous amount of capital in order to be successful. So it is difficult for venture firms to invest in pure video plays. There are companies that do audience aggregation and content creation.

Warren: We need to be careful not to just take a snapshot of the industry right now. You can assume it will be cheaper to deliver video online in three years. You can assume the monetization aspect will work itself out and agencies will have an easier, clearer role. The challenge is to figure out how to thrive and prosper over the next few years while the industry shakes out.

Michael: Was it smart to invest $100 mil in Hulu?
Neil: I only watch 30 Rock on Hulu. I can’t content on $100 million, but they are definitely a unique property in a unique moment in time. I commend them for creating a hell of a product. It is our belief that people who create great products do well over time.

Karin: There is a clear winner in UGC. Now there is a clear contender in the professionally produced content space as well.

Michael: Who will be the #2 player in UGC?
Neil: Its probably someone you haven’t heard of. It is so early. Everyone is struggling to figure out the business, but it is a reality that people are consuming massive amounts of video online. That is the dynamic nature of the web.

Warren: Video is a hot, sexy space. There is no shortage of people who are interested or capable of creating a video business.

Jane: Maybe there wont be a difference between UGC and professional content. In the end, what is good content is what will succeed. And we want people to be able to watch content wherever they want to.

Michael: Is everywhere fair game for distributing content?
Jane: We are very aware of content standards. Our shows are all PG-13, so we wont be on a porn site. Beyond that, the sky is the limit.

Neil: Todou is an investment we have in china. It means “Couch Potato” in Chinese. People sit in Internet cafes and watch entire shows. It has grown 100% a month for the last two years. It is a very compelling business. Monetization is still very early. But different countries have different levels of what they will tolerate as far as advertising goes. Businesses are built by great people with unique perspective, even if that means more advertising on certain content.

Warren: The video space is very interesting. You need to work with capitalists that understand the specifics of the sector. It is both a technology and media play. That isn’t often the case for VCs.

Jane: Foreign Body is a prequel to a book by Robin Cook. 50 episodes that will stand alone ahead of the release of the book. We launched it a couple of weeks ago, and the advertiser is Honda and they are very happy so far with how it has been distributed. We’re still waiting to see how it will ultimately turn out. The measures of success will be if the content is something that people like, monetization, and tune in. You can have great shows that people can’t find or a show that a lot of people watch, but there isn’t enough monetization.