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Video on Demand to Attract more Advertisers

While the video-on-demand (VOD) business generally has been disappointing so far, Turner Broadcasting is experiencing a noteworthy VOD boost, according to Kagan Research.

The basic cable network unit of Time Warner sells ads in VOD content re-purposed from its cable channels -- such as Cartoon Network, CNN and Turner Classic Movies. "From our point of view, VOD has been a nice and steady growth business," says Chris Pizzurro, vice president for digital new media at Turner Entertainment. "It doesn't have to be knock-you-over numbers to be successful."

Four years after launching its first VOD content 'free to consumers' with paid commercials, Cartoon Network today delivers more than 6 million VOD views a month. Next highest is Adult Swim with several million views monthly. Turner's other properties generate fewer than one million views: Boomerang, Court TV, TBS, TNT and Turner Classic Movies. Regardless, the audience for Cartoon Network VOD programming is growing at a triple-digit percentage rate year-over-year.

In the cable VOD arena, perhaps the high-water mark for views is set by independent platform Music Choice, which places ads in music videos. A select few get tens of millions of VOD views at peak popularity. Digital cable VOD reached 23.7 million subscribers at the start of 2006 and will grow to 28.6 million by year-end, according to data available on the 'Economics of Networks' site, published via JupiterKagan.

Advertisers buy VOD ads in much the same way as cable ads on a cost-per-thousand basis for a target audience, although with some differences, notes Pizzurro. Ads are sold on a monthly cumulative basis. Audience view data relates to households with no VOD-specific audience demographic data available yet; a program's audience on its linear channel telecast is a guide to its VOD audience, with perhaps a younger skew -- as younger audiences are early VOD adopters.

Finally, the views are an actual census -- because digital cable set-top boxes record every VOD request -- unlike the less comprehensive sample used for linear cable and broadcast audience ratings.

Pizzurro says VOD is pitched to advertisers as delivering an engaged audience, because viewers manually request the VOD program and watch only one ad, which creates an uncluttered commercial environment. In some cases, programs are available via digital media prior to premiering on their linear cable network.

Turner VODs are offered to consumers via cable system VOD platforms. Similar content is available on broadband via Turner network Web sites and separately licensed to wireless cell phones for premium pay, ad-free subscription content services.

As I reported previously, the state-of-the-art for VOD next year will include better targeting, so that ads are relevant to the individual household -- and eventually the individual consumer within that household.

It's yet another opportunity for service providers to think in terms of providing consumer incentives to share their 'lifestyle and interest' data that can be mapped with consumer persona clusters -- it's meaningful when it's relevant, otherwise it's just another annoying advert interrupting the entertainment experience. Wise marketers will know which model they prefer to align themselves, and their brands, with in 2007.

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