[Food for thought] Online Video Could Kick TV in the Rear …and Starcom tells you why…

One of the most influential media buying executives told players in the online video market Wednesday that even with appealing content and superior targeting capabilities, the industry is quizzically underperforming.

“How are you not kicking TV’s ass?” John Muszynski, SMGX’s Chief Investment Officer, asked.

After all, TV is charging more for less, which should be an opening to peel dollars away from it. On average, TV audience levels fell about 8% last season, Muszynski said. Yet, as the upfront marches on, networks are commanding notable price jumps.

“Despite those shrinking audiences, advertisers are signing up for 9% to 12% increases,” Muszynski said. “It’s ridiculous.”

(In fairness, Muszynski’s Starcom MediaVest Group pays those rates.)

While prices for TV rise, online video costs are flat to down, Muszynski said. Further showing online video’s value, his team spends hours trying to find ways to turn TV into an advertising platform more like it, with the addressability and interactivity. “You have all those tools at your fingertips,” he said at a MediaPost event.

That’s when he wondered why a good boot hasn’t been delivered right into TV’s posterior. (By the way, Muszynski, who has bought TV for decades, would like nothing better than to land a good kick. His SMG team has been working aggressively to spark an online video boom.)

“The TV dollars are continuing to rise and they are there for the taking,” the pleasantly ingenuous Muszynski said. 

But reasons for the slow progress — even as data does shows ad dollars are shifting online — include industry leaders failing to work together in ways that have worked in the TV business. Desperately needed, Muszynski said, is some sort of common currency.

In TV, Nielsen is sort of like the government: everyone needs it, but also bashes it. TV buyers and sellers are constantly prodding it to keep up with changing behaviors. Several years ago, Nielsen began offering “C3” commercial ratings and, after considerable disagreement, the industry coalesced around it as a currency.

Online video, Muszynski said, frustratingly hasn’t made much progress with developing “clearly defined, industry-acknowledged metrics” that could allow buyers to better evaluate their options.

“And at the end of the day, that’s what we’re looking for,” Muszynski said in his keynote address. “These standard metrics are needed to truly leverage all of the data out there, so we can measure impact against our objectives.”

Seemingly calling for a summit at SMGX headquarters in Chicago, Muszynski also expressed a need for standardization in how the market works, “some type of agreement on what is going to be sold and how.”

To be sure, there is a growing upfront market for online video, which largely involves deals with networks that meld their TV and digital inventory. Fox has made deals where a portion of TV make-goods would be delivered on one of its Web properties.

But outside the networks and some other established players, the online video market is a mishmash. With ad networks and other wrinkles, it can be as tough to meander through as the online display market  was several years ago, Muszynski said.

Coordination and standardization are needed before the hour gets too late. Online video’s value is potentially unmatched, but it may only be realized if a successful market infrastructure that allows its unique value to flourish materializes.

Maybe ironically, as Muszynski expressed frustration with TV’s pricing, he praised how its upfront market functions and suggested there could be a blueprint to follow there.

“(The) process is so streamlined and so efficient everybody wins,” he said. “Marketers get better pricing, premium content and they get their added value. The sellers efficiently sell significant ownership positions in their inventory. There are very clear similarities between television and online video.”

Not enough though. according to Muszynski. Yet.

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