From next month, viewers will be able to stream 10,000 programmes, including classics such as Brookside, Queer As Folk and Drop The Dead Donkey. The service will be supported by pre-roll advertising.
Media owners have recognised the demand for free online video from consumers. However, they continue to struggle to make money from selling advertising around online content.
The decision to beef up Channel 4's video on-demand (VoD) service follows the collapse of Kangaroo, the planned joint venture involving BBC Worldwide and ITV. Its demise forced the two broadcasters to make plans to develop separate VoD services.
At the same time, video-sharing website YouTube has started to syndicate professional TV content in an effort to attract ad revenue that it failed to make from user-generated clips. YouTube agency leader Bruce Daisley stresses the benefits of VoD for brands. ‘Professional content gets massive traffic and online video extends the reach to light TV viewers,' he says.
Warner Bros, Activision and Nissan are trialling pre-roll ads on YouTube programmes from Channel 4, BBC Worldwide, National Geographic and Discovery. Talks with ITV and Five to bring their programmes onto YouTube are ongoing. ‘We would want to control our own ad terms and branding of Five's content on YouTube,' cautions Five's head of digital media, Jon Lewis.
Greg Grimmer, partner at ad agency Hurrell, Moseley, Dawson & Grimmer thinks video advertising is unlikely to transform YouTube's fortunes. He says the site has been a financial ‘millstone around Google's neck' and argues that VoD has not taken off because there is not enough high-quality content to drive the advertising.
This could all be set to change, particularly now that BBC Worldwide is fleshing out ways to share iPlayer technology. Under its plans, Channel 4, ITV and Five would retain programme rights and control over their own ad sales. ITV is also exploring other ways to put more content online, including through the US VoD service Hulu.
There is some debate about whether consumers will accept ads before an online programme. Steven Hess, managing director of agency Weapon7, believes that viewers accept the ‘social contract' of advertising in return for free content, but points out that it is important to get the right content-match. He also highlights the value of homepage pre-roll teaser campaigns, such as the one for the Mercedes-Benz C-Class, which drove a 2.02% click-through rate, about 40 times higher than average on ITV.com.
Lewis claims Demand Five has seen a significant rise in the number of brands (50 a month) doing pre- and mid-roll ads, helped by additional content rights to US series like The Mentalist and Numb3rs. Agencies are less convinced of the value in mid-roll ads for brands as they feel they may provoke a negative reaction from consumers. ‘Disrupting the content in the middle is the anti-thesis of video-on-demand,' says Hess.
There is a view that brands should take money for pre-roll ads on VoD from their TV advertising budgets. However, advertisers often fund this advertising from their digital media spend, which is much smaller. Brands are also more interested in paid search and display ads than video content.
Giving away content is expensive and risky, so unprofitable online projects make no sense for broadcasters. At the same time, faced with falling TV adspend, broadcasters have little choice but to continue to develop their online video services in the hope that revenue will grow in line with demand.
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