Forrester: Get More Ads in Online TV, Stat

TV networks need to amp up advertising in their online streaming, and do it fast, says Forrester analyst James McQuivey in a new, very savvy research report. He posits that online streaming of TV-like content is only going to increase, so networks should start setting expectations for more advertising now in order to avoid a backlash later.

McQuivey says that since hit TV shows can get a 50 percent premium on online CPMs vs. broadcast, they should just go ahead and sell those spots (we’ll see if it’s quite that easy once the dust settles on this week’s upfronts). Online ads can also be required viewing, unable to be skipped over, he notes. Plus they stand out more because there aren’t too many other ads cluttering viewer’s experience (until his advice takes hold, that is).

Forrester had previously estimated that online video advertising spend would reach nearly $7.2 billion in 2012, up from $471 million last year. And it’s standing by that bullish number with this report.

Forrester’s latest research shows 67 percent of online consumers in North America watching online video in a typical month, with user-generated content leading the pack, but nearly everything else on the list being “TV-like” content — national news, movie clips and trailers, local news, TV show clips, full-length TV shows, etc. (see chart above).

As viewing habits change, McQuivey sees DVRs and VOD on the way out, and the nascent market for PC-to-TV connections on the way in. Just 18 percent of online video viewers make that connection now, according to Forrester’s count, but when they do the top thing they do is watch online TV on the big screen.

As consumers, we’re not particularly psyched to see our pleasantly ad-lite online TV experience change, but hey, we do want it to stick around. McQuivey’s specific advice is for TV networks to bring the number of ads they show per episode up to a range of 8-12 from the current range of 5-6. He also advocates content windowing and paid members-only experiences. Oh joy.