Broadband is changing the dynamics of ad business in the US: Nielsen

MUMBAI: Nielsen Analytics in the US has released a new report revealing that advertisers and television programmers are finding new and more lucrative advertising opportunities with broadband video.

The study has also determined that the use of broadband video actually extends the reach of traditional TV, and that broadband consumers are young, affluent, highly educated, and tend to have high speed web access virtually 24/7, making it an integral part of their lifestyle.


The study, Whatever, Whenever, Wherever: How Broadband is Redefining the Economics of Television is authored by Nielsen Analytics head Larry Gerbrandt and completed in partnership with Scarborough Research.

He says, “By researching controlled broadband access, this study concludes that programmers have the opportunity to create new revenue models to benefit content owners and their affiliated stations. Such ad-supported models are uniquely adaptable to the broadband environment and are potentially superior to existing models because they can take full advantage of the digital environment. With broadband streams, for example, fast forwarding through commercials can be disabled making it more likely the consumers will watch the spots and possibly interact with them.”

Despite growing numbers of prime time television shows being streamed (or pre-viewed) on network web sites, or the increasing popularity of user generated content (UGC), there has been no measurable negative impact on traditional television viewing. Video on PCs and iPods actually is expanding the audience of traditional TV programmes, supported by the fact that total TV usage was at a record high in U.S. households at 8 hours, 14 minutes a day during the 2005-2006 TV season according to Nielsen Media Research data. Household viewing has risen more than an hour a day over the past decade - or more than a half hour more per person.


Gerbrandt adds, “Advertisers and programmers using broadband have a unique advantage in the increasingly competitive advertising world. Ad models can be customized and managed in a broadband environment, and interactivity can be embedded into the program in such a way as to enhance engagement which does not take viewers away from the enjoyment of the programme.”

Broadband Video Advertising Models: There is a general consensus that viewers prefer short web-served ads, though the market is split between 15-second and 30-second pre-rolls per program segment. Furthermore, because broadband video offers levels of interactivity and viewer engagement not possible in a traditional TV spot, that argues for a higher CPM.

But television - especially the ad-supported kind - works according to a very different revenue model, and systems such as broadband streaming and downloading, could represent a new frontier to be explored and exploited. However, the posting of copyrighted content to web sites still presents challenges that remain to be litigated.

About the Broadband Consumer: Broadband access across the US has reached critical mass and is having a clear impact on user behaviour. According to Scarborough Research broadband consumers tend to have high speed web access virtually 24/7 - at work, at home and increasingly across an array of portable devices such as laptops, PDAs and mobile phones.

While only about nine per cent of US adults report spending 20 hours or more a week on the Internet, this number nearly doubles, to 17 per cent, among those with broadband access at home.

There is a strong correlation between education and Internet access, and the same holds true for broadband connections. Of the roughly one-third (33 per cent) of U.S. adults reside in households without any Internet connection, 69 per cent have only a high school degree or less. The comparable percentage for those in broadband households is one-third or 33 per cent.

Of all US adults, almost a quarter (24 per cent) have a college degree or greater. This number increases to 35 per cent among adults with broadband Internet access at home. Moreover, the overwhelming majority of those with post-graduate degrees have an Internet connection, and most of those have a broadband connection.

Broadband consumers are upscale: According to Scarborough‘s findings, 17 per cent of consumers have an annual household income of $100,000 or more, compared to 28 pr cent of those with broadband connectivity. Less than a quarter (21 per cent) of all consumers live in homes worth $300,000 or more; but the figure is 30 per cent for those consumers with broadband in their household.

There is a clear generational divide in broadband adoption. The 18-34 demographic represents 34 per cent of those with broadband connectivity in their household. Though consumers 55+ are less likely than their 18-34 or 35-54 year-old counterparts to be broadband customers, broadband penetration among this older age group will likely increase. The 35-54 demographic is currently most likely to have home broadband access (45 per cent).


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