Advertisers remain unaware of what the Internet offers in complementing their industry. A recent study found that “the removal of NBC content from iTunes caused a 11.4% increase in piracy for their content, which corresponds to… about 48,000 total additional pirated downloads per day. This number is nearly twice as large as the daily number of downloads of these episodes on iTunes in the two weeks prior to December 1, implying a fixed cost associated with the decision to pirate: once individuals start to pirate, they pirate more content than they would have originally purchased” (Danaher; Dhanasobhon; Smith; Telang, p. 3, 2010). In other words, the exposure to television content in an online platform is substantially greater than its traditional counterpart, and with this comes the opportunity for advertisers to invest in an equally high level of contact with their audience.

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The findings above can have immediate effects on online advertising effectiveness for those invested in embedded advertising. These advertisements are those entrenched in the television content itself, such as billboards in the background of a sporting match, or the type of beverage drunk by a character in a fictional program. In a one-of-its-kind study that examined a sample’s natural and uncontrolled response to the televised 2006 FIFA World Cup sporting matches, a number of factors were found to have a positive effect on embedded advertisement recall; including program involvement, enduring involvement, and social environment  (Moorman; Willemsen; Neijins; Smit, p. 33, 2012). Essentially, advertisers should utilise embedded advertising in programs where there is a combination of a strong fan base and a propensity for consumers to gather in groups when viewing. This is especially the case in online content where the ability to choose the program being viewed creates a greater investment in the product. From the content producer’s perspective, embedded advertising draws in revenue before a program has even aired, acting as a small insurance against the chance that a program is not popular with viewers. In watermarked

advertising (a concept further discussed in the ‘Borrowing from

Broadcast’ section), atradeoff between producer-content value and

level of advertising is observed that could be similarly applied to

embedded advertising: “there is a limit to how much [advertising

data] can be added; that limit is the amount of data that ​degrades

the integrity of the content beyond an acceptable level”(Acken, 1997).

In other words, the amount of embedded advertising can exceed a

certain point where the program being viewed becomes perceived as

a commercial product rather than a valued artefact to the consumer.

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There are a few oft-avoided strategies that, even through their
examination alone, could benefit the state of advertising in the

online television medium. Existing data on audience attitudes

toward advertisement format suggests that sponsored content has a

higher perceived advertising value than banner advertising – that is

to say the former is seen to be the “more informative, more amusing

and less irritating” of the two (Tutaj and Reijmersdal, p. 8, 2012).

Given these are all factors that contribute toward destabilising a

publically shared negative perception of online advertising, industry

professionals would benefit from examining factors of entertainment

and invasiveness and replicating the ways in which sponsored

content bears a greater appeal to its audience than its banner

counterpart. Logan supports this idea by suggesting that one “should not regard OTV (online television) as an extension of the traditional TV medium” (p. 14, 2012). Advertisers must renegotiate online advertising in terms of approaching the consumer in a fashion entirely different to that attempted in broadcast television commercials. This is in line with functional uniqueness theory, which “can be understood as features of the online video platforms that are better—or simply different from television—in terms of satisfying consumer needs” (Cha and Chan-Olmsted, p. 273, 2012). The principle of having the online video industry “focus on their platforms’ ability to satisfy consumers’ needs of learning efficiently” (ibid.) may be applied to advertisers who are shifting their focus from the broadcast format of distribution toward online modes.

Personalised advertising is a strategy that demands integration with online television advertising due to its prior success. Personalised advertisements are “customized promotional messages that are delivered to each individual consumer through paid media based on personal information” and are effective in reducing ad skepticism – the second largest contributing factor to ad avoidance behind ad irritation (Baek; Morimoto, 2012). A commonly perceived drawback of personalised advertising is an increase in consumer privacy concerns. Among online advertising’s key demographic of younger generations however, privacy concerns are a weaker indicator of ad skepticism (ibid.), due to the normality of a technologically proficient lifestyle and the perceived comfort that comes with pursuing it.

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Investing in long-term online advertising is shown to improve advertising efficiency, taking into account competitive companies and the effect of advertising on sales over time (Pergolova; Prior; Rialp, 2010). What remains to be evaluated is the specific effect of online television advertising on increasing efficiency. This grey area rests uneasily in the mind of the advertiser looking to invest in online television. From the content producer’s perspective, one potential avenue for facilitating online distribution is to implement user-subscription structures that require customers to pay a fixed monthly or yearly fee to gain unlimited access to content, the likes of which have already emerged with Hulu Plus and Netflix (Wildman and Chew, p. 385, 2012). This option deviates from the aforementioned solutions in that it has greater potential to further remove the advertiser – a massive source of revenue – from the distribution equation.

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​REFERENCES:

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Acken, J. 'How watermarking adds value to digital content: a digital watermark isn't just a tag or label for protecting content but an opportunity to increase the value of the content itself.' in Communications of the ACM, July 1998

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​Baek, T; Morimoto, M. 'Stay Away from Me: Examining the Determinants of Consumer Avoidance of Personalized Advertising' in Journal of Advertising, Spring 2012, vol. 41, no. 1, p.59-76

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Cha, J; Chan-Olmsted, S. ‘Substitutability between Online Video Platforms and Television’ in Journalism & Mass Communication Quarterly, p.261-278, 2012.

 

Danaher, B; Dhanasobhan, S; Smith, M; Telang, R. 'Converting Pirates without Cannibalizing Purchasers: The Impact of Digital Distribution on Physical Sales and Internet Piracy' in Marketing Science, March 2010

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Logan, K. ‘And now a word from our sponsor: Do consumers perceive advertising on traditional television and online streaming video differently?’ in Journal of Marketing Communications, Feb 2012, p.1-19

 

Moorman, M; Willemsen, L; Neijins, P; Smit, E. 'Program-involvement Effects on Commercial Attention and Recall of Successive and Embedded Advertising' in Journal of Advertising, Summer 2012, vol. 41, no. 2, p.25-37

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​Pergelova, A; Prior, D; Rialp, J. ‘Assessing advertising efficiency: Does the Internet play a role?’ in Journal of Advertising, Fall 2010, vol. 39, no. 3, p.39-54

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Tutaj, K; van Reijmersdal, E. ‘Effects of online advertising format and persuasion knowledge on audience reactions’ in Journal of Marketing Communications, Feb 2012, Vol 18, No. 1, p.5-18.

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Wildman, S; Chew, H. ‘Television in Flux’ in Understanding the Interactive Digital Media Marketplace: Frameworks, Platforms, Communities and Issues. Ch. 30, p.378-391. 2012.

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