Free to View Internet TV Stations and Advertising
– Part 1

In the Internet TV Book, when it came to business models and looking for ways of making money to fund your Internet TV station, I strongly suggested you look at the pay 2 view and subscription revenue models.

The reason being that advertising revenue was so hard to get or to obtain in sufficient amounts to fund both production of new video programmes and your video streaming or video download costs.

The consequence of this is that Internet TV (or IPTV as some call it) is becoming the province of the major channels, who essentially use revenue they obtain from either advertising or subscriptions or (in the case of the BBC in the UK, license fees levied with the agreement of the Government), to fund their internet presence.

Why is it so hard to obtain advertising revenue?
Well, it is hard not just for Internet TV stations, but also for many small satellite TV channels. The reason is the way that TV advertising is measured, and the structure of the advertising industry.

In the UK TV advertising is measured by BARB, which uses a sample of 5000 households and measures the viewing habits of the occupants, and from that weights the viewing figures up to give the estimated national audience.

For a small channel it costs £40,000 a year to be included on the BARB panel

In the US TV advertising is measured by AC Nielsen, using a sample of 5000 households that have been wired with “people meters” that track what programme is being watched and who is watching them. Again the viewing figures are weighted up from the sample to give an estimated national audience.

So, the information that gets fed back overnight tells Pepsi (or Proctor and Gamble) that an estimated say, 5 million people watched CSI, and those people were mainly mid-market males aged 35-45.

So if you are not included on BARB in the UK or on Nielsen in the US, as far as advertisers, advertising agencies, and specialist media buyers are concerned, you don’t exist !

Now, if you are not in the business it may come as a surprise to you to discover that most company’s with advertising budgets don’t ” buy“ their advertising direct themselves, it is typical for your advertising agency or a specialist media buyer to do the job for them.

Getting into the advertising agencies is bad enough, but when you have to try pitching to a specialist media buying agency that is really hard!!

The issue is that media buying agencies have to buy the best advertising campaigns for their clients that they can, and they use BARB and Nielsen ratings as the “currency” for doing so.

And then they get audited by specialist media auditors who evaluate their media buying performance. So they need to have rock-solid numbers to PROVE they made the right decision.

The other thing to bear in mind is that these people are used to buying advertisements in programmes with audiences in the millions, and even a large independent internet tv station will have trouble getting anywhere near that.

So when you turn up, assuming you get that far, with your streaming stats (which can be, lets be polite, “massaged”, and are not independently verified), and an audience of, lets say, 10,000 viewers a day, you are most likely to be given 5 minutes and then shown the door !!

You also need to consider the true nature of online advertising. Most online advertising is based around Pay Per Click type advertising (as per Google Adsense), or banners (with click through tracking) on high traffic websites (high traffic equals 1,000,000 individuals a day !!) and the advantage of this is that you know directly how many clicks you get, and what your conversion rate is to get a sale, and your cost per sale.

Now in my terms this isn’t really advertising, its more like direct marketing, and it certainly doesn’t do much to build a brand as in traditional Television, press, poster and radio advertising, but that is the media buyers frame of reference.

Is there a solution and can you get round these issues ?
Well, yes, but these aren’t quick fixes and you have to work at them.

I will go over these in my next article…….

The Internet TV Book