First, I hope everyone had a spectacular holiday. I certainly did with the new twins, and it was nice to spend time with the family since StomperNet has been gulping up so much of my attention the past few weeks.

Now, back to business!

I came across this Associated Press article via E-Commerce times and it’s something I find particularly interesting. Microsoft has begun to tie logins to their various online properties (Hotmail, MSN, etc) to the other sites and information those users access across all their sites. Using “cookies” to track users across pages is certainly nothing new, but Microsoft is in a unique position to track users across a large number of different services and types of information. For instance — What does “John Doe” look for on MSN Maps? What online journals does “Jane Doe” read?

Some call this “Personalization” technology.

Some call it intrusive.

Now you may ask yourself why Microsoft would want to do this, and the reason is simple – they’re gathering data to create profiles of broad user groups. They’re doing this so that they can then approach marketers with these groups they’ve defined. They can then offer them as “channels” through which the advertisers can offer highly targeted ads to a highly targeted niche. The example given in the article is “Women over 30 who read financial news”. If you wanted to reach that particular group of people, the theory is that Microsoft knows who those people are, and what sites they frequent, so they can more effectively place ads in front of them.

Now Microsoft is following behind Yahoo in this “behavioral targeting” component of their advertising strategy, but by coupling it with this demographic intelligence they’re gathering, I can see how this will make their advertising products much more effective for their customers. According to Microsoft, the behavioral targeting alone can increase ad click-through by 76%!

Of course, the idea has its opponents. When you have a company collecting this amount of data about its customers, it’s bound to raise privacy concerns. Microsoft’s response is that they feel users ultimately will not mind because they will begin to only see advertisements that are relevant to them, thus increasing the quality of their online experience.

Personally, I can see both sides of that issue. As a marketer, I’m very excited about the opportunity that this opens for my companies. As a consumer, I’m concerned about being silently monitored to this degree without being consulted at all. I have to say though that in general, I agree with Microsoft’s assessment that it will ultimately raise the signal-to-noise ratio for their users experiences. I’ll certainly be keeping my eye on this as it develops, and you should too.

Right after I posted about the growing audience for online video, I came across this article about how much advertisers are spending on online video ads.

This year saw 82% growth in spending for a total of roughly $410 million.

Next year is projected to be even higher, with 89% growth totaling $775 million.

By 2008, online video ad sales are projected to break the BILLION dollar mark. That’s BILLION, people. With a ‘B’!

Why? According to the article, ad buyers are starting to accept the promise of online video, and they’re seeing great ROI. Video ads convert a LOT better than the previous generation of banner ads.

But as always, we’re talking about walking a fine line here.

We’re in the incubation stage of this new advertising medium. The early adopters are doing the experiments that will tell the rest of the marketplace what works and what doesn’t: size, placement, running time, etc.

Most places are pairing the commercial video with the free video content in the form of “pre-roll” ads. I’m sure all you have watched a clip on a site somewhere and had to sit through a commercial first, right? That’s a “pre-roll”, but studies are showing that a significant segment of the internet audience immensely dislikes that kind of separation from content.

However, audiences are becoming more accepting of these kinds of practices, and the article implies that it’s because audiences understand the tradeoff between free, ad-supported content.

Some content providers are even trying both sides. ABC offers their shows free online with ads, OR you can buy the content outright via iTunes and not have to sit through the ads.

Personally, I think this is the best solution. I’m a huge fan of the democratizing nature of the internet.

The internet puts control of the media back into the hands of the public, and allows them to better inform marketers about what the marketplace wants. But for the provider, there are still costs involved in production. It’s not much different than the difference between shows on your major networks which are broadcast for free with ads, compared to premium pay shows, like the Sopranos on HBO.

No matter what medium you’re working in, you should always try to utilize that medium’s unique strength. Giving the customer the CHOICE to either pay for the content, or see supporting ads for free content, works to the unique strength of the internet as a whole, which is CHOICE.

In the past, that choice has been a problem for e-commerce, in that if you didn’t give the customer what they wanted, they would choose to bail out on you and visit your competitor. For these content providers, rather than lose potential customers to piracy and illegal file-trading of their content, they let the customer choose how to “buy” that product — with their money or their time. The content producer makes their money BOTH ways, either directly from the consumer, or from the advertiser who will pay for their time and attention.

The producers win, the advertisers win, and the customers win. And it’s because of this “all-win” scenario that by 2010, online video ads will be a $2.9 BILLION industry.

That’s with a B.

The article comes from e-commerce times and you can read it yourself here:
http://www.ecommercetimes.com/story/54455.html?u=colintheriot&p=ENNSS_52f2f8da3bea7cda6d2ad15acdde1d35

One of our IT guys forwarded a story to me from ITWire Australia that got me really excited.

According to a study done by the BBC, online video is beginning to erode TV audiences by noticeable amounts in the UK. Gee, think that trend that will continue here as well?? (Although okay historically, they catch on to tech trends a little quicker there, like with cell phones and texting. But still.)

Some interesting numbers came from the survey of 2,070 Britons:

• 43% of people who say they watch video from the internet or on a mobile device say they watch less broadcast TV as a result.
• Though only 9% said they watch online video regularly, 13% watched occasionally, and a further 10% said they plan to start in the coming year.

This is a huge audience and it’s only growing. The internet continues to democratize our mass media, and the cost of entry into web-based video is ridiculously low. With a $25 webcam, anyone can begin video blogging via YouTube or Google Video with absolutely no hosting costs.

Web video is still in its infancy (even though YouTube sold for $1.6B, it was only started in 2005), but I can’t help feeling like we’re looking at the same kind of situation that occurred when Napster first came on the internet scene (way back in 1999) and everyone started trading music like wildfire before the recording industry caught on.

However, unlike that whole debacle, there is vastly more original video content being distributed than there was original audio content (though there are still a lot of copyright issues cropping up here, too.) There’s a great opportunity here not only for the big players like Google, who intend to monetize internet video ASAP, but also for the little guy trying to get his message out there, whether it’s business related or not.

The movers and shakers in this field will be looked back on as pioneers in a few years. Stars are being made in this area and today’s novice will be tomorrow’s expert, just as it was for blogging and then podcasting. Maybe one of my readers is going to be one of the inevitable Internet Video Gurus? If so, let me know – maybe we’ll have you speak at StomperNet 07!

The ITWire Story is here:
http://www.itwire.com.au/content/view/7513/52/

The original BBC report is here:
http://news.bbc.co.uk/2/hi/entertainment/6168950.stm