Network
The premium rates in the just-ended 2008-2009 television season are mainly for shows that rank among the most-watched by Nielsen Co., said David Poltrack, chief research officer at New York-based CBS Corp., which is home to “CSI” and owns TV.com.
Marketers, who are now considering commitments for the 2009-2010 TV season, are willing to pay more because TV.com and Hulu.com, owned by investors including News Corp., NBC and Walt Disney Co., provide committed viewers who actively seek out shows. There are fewer commercials, and consumers are twice as likely to recall Web ads, Poltrack said, citing Nielsen.
“The reason people are paying such a high premium for these ads on the Internet is they do have a captive audience,” Poltrack said. “You know you have eyes on the screen.”
The challenge for the networks, whose total prime-time audience shrank 3.6 percent last season, is that Web viewing and ad sales, while increasing, are still too small to replace traditional revenue sources.
CBSs April 6 broadcast of the U.S. collegiate basketball championship game, for instance, attracted 17.6 million viewers, according to New York-based Nielsen. By comparison, the networks Webcast of the championship tournament starting in March drew 7.52 million unique visitors, according a statement.
TV vs. Web Rates
CBS, owner of the most-watched broadcast network, gained 23 cents to $7.02 yesterday in New York Stock Exchange composite trading. The shares have lost 14 percent this year. New York- based News Corp., whose Fox network airs “The Simpsons,” fell 8 cents to $8.99 and has dropped 1.1 percent this year.
Marketers typically pay $20 to $40 per thousand viewers for a prime-time ad. On Hulu, which began offering shows to the public in March 2008, an ad on the animated series “The Simpsons” costs $60 per thousand viewers, Michael Nathanson, an analyst at Sanford C. Bernstein & Co. wrote in a June 18 report.
“It ends up being twice as expensive in the Internet world,” said David Cohen, U.S. director of digital communications at Universal McCann, which is owned by the New York-based advertising company Interpublic Group of Cos.
That isnt deterring companies from buying time.
Intel Corp., the worlds largest semiconductor manufacturer, has shifted spending to sites including Hulu, which streams TV shows from NBC, Fox and soon ABC, as part of a $100 million worldwide marketing campaign, according to Arlene Villanueva, global media director for the Santa Clara, California-based company.
“Hulu has all the comedies on NBC, Fox and now ABC,” Villanueva said in an interview. “Most of those fans will watch the finale again or catch up on episodes they missed. Its a great opportunity to be smart and reach our audience.”
General Motors Corp. will direct brand-building dollars to premium videos on the Internet while it works to emerge from bankruptcy, said Betsy Lazar, executive director of advertising and media operations for the Detroit-based automaker.
“As the economy improves, we expect that demand for premium programming on the Internet will increase as well,” Lazar said in an e-mail.
The gains from Web ads only partly counter the loss of traditional advertising for Fox, Walt Disneys ABC, CBS and General Electric Co.s NBC. At CBS, interactive revenue amounted to 6 percent of the $2.23 billion in first-quarter TV sales, according to a May 7 company statement.
Siphoning Off Viewers
Nathanson, based in New York, estimates ad sales at the four networks will drop 10 percent this year to $12.8 billion.
Networks also risk siphoning off prime-time audiences to sites with less inventory and lower ad sales, the analyst wrote.