Integrated Media Measurement, Inc. (IMMI) has issued a report showing that up to 20% of episodic content viewing occurs online, depending on the genre of the content and the amount of time the show has been on the air. In a some cases i is higher than DVR viewing of the broadcast content.

Download the full report.

Some of the more striking data shows that online viewing is flat out replacing TV, not just catching shows you missed or clips that you wanted to watch again. Another key difference showed that white, affluent, well educated, working women aged 25 to 44 were the dominant viewers of online TV content, compared to the male 18-25 demo that is typically associated with online video. To me, this signals the shift away from the UGC fad into higher quality, professionally produced content.

No surprise that the folks at AdAge get it. Online ads are a reasonable value exchange for good content. Not so much for UGC. Just look what happens when you stop asking people if they like advertising, and instead ask them if they are giving and getting something of fair value in the exchange.

Remember The Covenant…..kinda sounds like it to me……

Pew Internet and American Life Project yesterday put out their annual home broadband penetration report. 55% of American homes now have broadband connections as of April 2008, up from 47% in March 2007.

Above: Pew Internet Home Broadband 2008 Key Findings

While in the U.S. and Europe, broadband has evolved as an extension of MSOs, in developing nations the cable phase has been skipped entirely and wireless penetration continues to outpace broadband growth. Daily Wireless points to a study from Gartner predicting wireless penetration in India will grow from 20% now to 60% in 2012.

Which means that as the world flattens, here in the U.S. we can expect to view a lot more online video shot on mobile devices in foreign countries. And when distributing content for an international audience we should plan to deliver it in a format accessible to the millions who will use a phone as their primary source of media consumption.

In case you haven’t clicked on every link in our blogroll (but why haven’t you?), head on over to Mark Glaser’s MediaShift blog. Mark spoke to a number of industry leaders about the state of online video advertising, and I must say that its one of the most balanced pieces you’ll get to read.

But if you absolutely refuse to read anything about online video except us, here’s what I had to say:

Probably the biggest mistake people make is in equating professional, studio-quality videos with the more amateur content that dominates video-sharing sites.

Yep. Some content just isn’t monetizable. Go figure. In case you need a refresher, pre-roll isn’t bad. Poorly placed pre-roll is. Remember the covenant! And more importantly, remember not to piss off Steve Hall.

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.

There are lots of cool companies, technologies and ad formats out there. But without metrics, “cool” ain’t worth much. So who is helping people figure out just how cool their ads are? Visible Measures is one of those companies. I’ve had the pleasure of chatting about the industry, and not the industry, with Matt Cutler, Visible Measures’ vice president of marketing & analytics, at the past few trade shows. Beet.TV grabbed a few minutes of Matt’s time at OMMA Video earlier this week, and let the MIT grad explain what’s behind all this engagement and metrics stuff. Watch……

The IAB has released its definitions for InStream ad metrics. View them on their site or download the PDF.

This is a critical step towards simplifying the buying and selling of online video advertising and speeding up the shift of TV ad dollars onto the Web. Definitions cover linear, non-linear and companion banner metrics.

Questions? Do they make sense? Will they work? Comment!

Moderator: Dan Ackerman, Sr. Editor, CNET
Andrew Budkofsky, Break Media
Lynn Bolger, comScore
James Kiernan, MediaVest
Maniak Mazumdar, Nielsen
Even Silverman, Lifetime Networks

There is a lot of discussion about ISP data and how it can be applied to the web. comScore and Nielsen may not be as accurate down the long tail.

Long tail is important, but there are challenges to that. If you are on the internet for a long time, Nielson would like to be able to track you.

What are companies doing to bring stability to a tumultuous situation?
It is more about looking at 3rd party ad serving metrics, rich media partners, and fusing all the data together so that it is actionable, and we can apply the learning to our next campaigns. Lots of success using dashboards to pull together data from disparate stories.

Is there a danger of having data that can’t be validated or even recreated by other parties?
Yes, there is some, but it isn’t like people are pulling from obscure data sources. Agencies do need to be more transparent about the data they are aggregating and using.

Time spent is an idea metric in the gaming sections. In other sections, it might be page views.

How do you choose what to cherry pick for data? Do you strive for accuracy and consistency first?
It is most important to be accurate, no matter what the methodology. You need to find out what is important to the client and the clients goals. We need to be honest about the ad experience.

Advertisers are all looking for different things, so it is difficult to have a uniform methodology.

Maniak, Nielsen: We’re hoping that people don’t have to cherry pick. We can provide enough data and consensus around that data.

Dan: Lets focus on time spent.
James Kiernan: time spent is a nice proxy for engagement. But until we can measure time spent’s impact on offline sales, it is sort of meaningless.

Lynn, comScore: Which metrics are you going to use to build a business model? Transactions are based on site side data. Demographic data comes from panels. How do those pieces fit together to create a marketplace? How does a non-linear video experience compare? And most importantly, which piece do you want to negotiate on?

Dan: Who is being undercounted under different methodologies?
Maniak: We see both sides. When it comes to volume metrics, server side is more accurate. But there is a big “but.” There are lots of bots and spiders out there, so you need to clean the data. If you are using server side blindly, you are basically targeting machines. Panels are great place for audience metrics.

Dan: What about demographic groups being under represented?
Maniak: Young people are under reported. But if you believe in statistical sampling, there are ways to measure and account for that. People say that you can’t measure one audience or another. There ways to adjust for the “at work” audience, for example.

Lynn: There are challenges with kids, not just online. The at-work audience is also difficult. The practical reality is that there are firewalls.

Evan: What about shared computers?
Lynn: We identify the individual user on the machine at the time.
Maniak: There are log ins for each person. We can leverage that to distinguish individuals from each other.
Lynn: people give up a lot of personal information that we can use.

Dan: What about other companies, like Compete.com, that put out data that you can quote, even if you don’t know where it comes from.
Lynn: Use it at your own risk.

Dan: What is the ideal set of numbers?
Andrew: it would have to be a direct measurement of some kind. There are just too many discrepencies right now. It would be mostly server based, but can also be cookie based. But we need to use what the agencies are using.
Lynn: It will still be panel based.
James: Hybrid models are very intriguing. They bring the best of both worlds. I’m waiting for someone to bring it to market, but it will be more on the server side.

Maniak: We measure people, no matter what the devise or platform. There are always gaps in measurement with new technologies.

Evan: As someone who works for a cable company, merging measurement for online and offline is the most intriguing to me.

Lynn: the question of accuracy is critical. Measurement of the transaction is critical. When it comes to looking at what will happen in the future, we need data that is predictive. The role of panel data brings an awful lot into the planning process and will be required today and moving forward.

Q&A: With distribution models changing so much, how are you tackling those issues?
Maniak: If it is TV content, there is a watermark. The distribution issue isn’t a problem, at least not for TV content.
Lynn: there are business questions that need to be considered. How the inventory is packaged and sold. There is a mapping system that tracks content and where it is played, so we can bring it all back together.

Q: With people surfing the web on multiple devices, are impressions all of equal value?
A: Yes. Doesn’t matter if you watch it on an iPhone or the web.
James K: The TV networks have it backwards. They have a model where they can’t really prove the value of an impression.

Q: Is there more value to watching something on TV or downloading it on your xbox 360 on your TV, is it the same experience?
James K: We’re setting up our agencies so that it doesn’t matter where you watch your content. There won’t be broadcast vs. broadband buyers.
Lynn: there isn’t going to be a universal solution. Some marketers will want it all in one place. Others will want it segmented. But the outcome is what is important. On mobile, you can determine if someone walks into a store with GPS. The outcome metrics need to be different than if you watch on TV.

Q: Since there are discrepancies, does comScore work with publishers to make sure that the panel based data is closer to the server side data?
Lynn: We will always work with anyone on the technology to make sure the data is accurate as possible.

Q: How do you track embeds of embeds and downloadables?
James: I’m very intrigued by using watermarks to track content.

Moderator: Steve Smith
Philip Braden, ScanScout
Eric Hadley, CEO, Heavy
Rebecca Paoletti, Yahoo
Chris Allen, Starcom

Panel starts with some show-and-tell.

ScanScout Philip Braden shows overlays. Plays in-stream while the video is playing. From that point on, the ad experience is completely user initiated. New example that Philip showed was a video-in-video overlay. Cool demo alert: There was video playing in the overlay. Lots of potential here.

Eric Hadley, CMO, Heavy.com, shows an example from the Husky Media Network. It is a full page takeover that wraps around the video player. They also have a video guide that can load other syndicated content, and then serve an ad against the syndicated content, which has been pre-vetted for ad friendliness. Essentially, their ad covers up all of the content on a website except the video player. It removes the risk of having your ad seen along side questionable content.

Rebecca starts by asking the room how many people would buy those Heavy skins. Not one hand. Then into the Yahoo pitch. Four different formats, but 90% of their revenue comes from only two of those formats. User is prompted to roll over for more info. When the user does, an overlay appears that can be interacted with. Rebecca says they are seeing 6% CTR on them. A whole 6%. Not a “point-six percent.” She also shows a persistent bug that sits on top of the player that will launch an overlay. Clicking on the subsequent overlay can launch a microsite that sits on top of the player. For each clip, the advertiser gets three opportunities to engage.

Steve: What types of content are these formats good for monetizing? How do they map and match against different types of content?

ScanScout: overlays work across all types of content. They also work great for short form content where you can’t show a pre-roll. You can also contextually target the ads. We have a fair number of publishers that have UGC, and we can filter out undesirable content. The technology is flexible, which allows a brand like Disney to have different standards than Budweiser.

Eric, Heavy: We find that the skins are excellent for monetizing longer form content. We can show multiple ads without asking the user to interrupt their experience. The video guide allows the advertiser to know what content their ads will be next to.

Rebecca: We can serve pre-roll against a lot of our professionally produced content, like sports highlights. Some publishers don’t like overlays because their content is their ‘bread and butter’ and they don’t want it covered.

Philip: We can also put the overlay under the player for publishers who don’t want to cover any of their content.

Steve: Are we effectively monetizing short news clips?
Rebecca: Specific content may not be monetized on purpose. Breaking news, for example. We want users to be able to get a hurricane update immediately, without watching an ad.

Steve: Are these formats making video safer for brands?
Chris: We have two buckets. UGC and not UGC. Most of our advertisers believe they can reach their audience without dipping into the UGC pool. But we still see tons of pre-roll, mainly because its easy. They’ve already created it. We advocate for shorter ads. But you can’t get substantial reach without looking to the portals. We also look at the ad-to-content ratio for a publisher. 4:1 content to ad ratio is probably OK. We’re helping our advertisers understand what they can do with video. Most of them don’t know that you can do lead gen with video.

Steve: What about portability? Is there pushback from publishers or brands that don’t want their ads to follow the content as it is hypersyndicated?
Philip: We integrate our technology so that the ads can travel with the video. But we also want to know where the content has gone before we serve an ad.

Rebecca: Portability was a huge push for our latest ad formats. We wanted to make it easy for our publishers to use. We focused on keeping the interactions within the video player.

Chris: We want see where the content goes before we buy ads. Syndicating content out to social networks is still scary for a lot of advertisers. When we first started talking about syndication of content across the web, we knew it would be huge. Previously we had always applied the value to the content. But we’re finding that there is also a lot of value on the publisher that delivers the content. The CBS Audience Network still gets the majority of their views from CBS.com.

Steve: How well do the formats encourage video use?
Eric: We wanted to be able to monetize the video anywhere, and not force people to watch a pre-roll. When you serve an ad in the middle of a video, you’ve already got the user hooked. You need to get them hooked first. If they back out of the video because of a pre-roll, you lose all the potential ad impressions that would have come after it.

Philip: Its hard to say that any form of advertising encourages viewing. But ads need to be configured in a way so that it doesn’t alienate users.

Rebecca: This is an ongoing debate. I always have people saying “kill the pre-roll.” And we’ll test it, but it never affects the levels of video consumption. Our focus is on the number of videos to ads. On the entertainment side, there is no difference in video consumption regardless of the ad format.

Steve: Video ads are becoming more interactive. It is still interruptive, even if it is up to them. Are people really willing to interact with an ad?

Philip: Engagement in general is good. We are 1%+ CTR on the overlays. But more than half of the people that click on the overlay eventually click through to the destination site.

Erik: We put the interactivity in the skin because it is such a large piece of real estate. Our audience multitasks. They want to watch a bunch of goofy videos, not really paying attention.

Steve: Are we getting to the point where there is confusion in the market about what constitutes a video ad?

Erik: You need to try lots of things.

Chris: People expect new things. They want to be entertained and have fresh new things in front of them while they are surfing the web. Part of our job is to be respectful of the user experience.

Steve: What are you charging media buyers for these ad formats?
Philip: Overlays start at $10 CPM.
Erik: We’re looking at $25 CPMs
Rebecca: We’re in the middle of negotiating our upfronts, but generally CPMs start at $25 for ROS because we are able to do a lot of targeting.

Chris: When I compare video CPMs to TV, there is a huge premium online. And we’re willing to pay that premium if we know that it is being effective. I think the “teens” is a good rate for pre-roll.

Head on over to Kevin Nalt’s Will Video For Food and read his post on video sponsorships, product placement and selling out. Its spot on.

In it, he cites 5 trends for online video product placement. I particularly liked #4:

4. There will be no trend four. Trend four is often wrong, which itself is a growing trend.

So go read the other trends, and the rest of the post.