Blog Post

Break It Down: $120M for Streamed TV

U.S. television networks will generate $120 million from online advertising shown on streamed episodes in 2007, according to a major media buyer executive. Tracey Scheppach, senior vice-president and video innovation director for Starcom, told the Financial Times that number was based on extrapolating her company’s purchases across the web sites of the four major TV networks.

That’s a nice, meaty number to throw into your PowerPoint decks, but let’s get some context. By contrast, network television is supposed to account for $23.4 billion in U.S. advertising spending this year, according to TNS Media Intelligence. Some 16 percent of American households stream TV broadcasts online, according to TNS and the Conference Board. Forrester recently estimated that total U.S. online video advertising spending would amount to $471 million in 2007 (The FT quotes a much bigger estimate, but strangely ignores the fact that the number doesn’t break out audio revenues).

At a recent Forbes conference, Disney CEO Bob Iger disclosed the most specific details anyone’s heard publicly about a network site. Scheppach echoed those figures in her comments to the Financial Times. These are good benchmarks because ABC was the first major network to offer full episodes online and has quite a large library of shows available.

[Iger] said has streamed 160 million TV episodes and that 87 percent of the online audience recalls the names of the sponsors. He also said that online episodes don’t cannibalize TV because the average watcher online is younger than 30, while the average age of a primetime viewer of ABC is older than 40.

All these statistics are especially relevant in light of recent events. Shared revenue from content streamed online is a big part of what’s being discussed in the contentious battle between the Alliance of Motion Picture and Television Producers and the Writers Guild of America. The AMPTP reportedly offered “a residual structure of a single fixed payment of less than $250 for a year’s reuse of an hour-long program (compared to over $20,000 payable for a network rerun)” today in its ongoing bargaining with the striking writers.

A few days ago, TVWeek reported that the TV networks had underestimated how much content people would stream online, and thus had filled a glut of empty ad slots with in-house promos. Coincidentally, that story was also based, in part, on an interview with the apparently very talkative Ms. Scheppach of Starcom. However, I have to say that I watch a fair amount of TV online and it doesn’t appear to be overrun with house ads, so that particular article’s premise seemed a bit off-base to me.

3 Responses to “Break It Down: $120M for Streamed TV”

  1. $120 million is one bombed movie, and not even a huge bomb any more.

    As I was told by a studio exec the other day “we did $2 billion in ad sales last year and are trying for $2.5 billion this year – why do i want to have my ad force spend time on these internet webisodes again?”. Puts it in perspective.