CBS’ Smith: OnDemand Online Will Bring More Ads

quincysmithWhen CBS jumped onto Comcast’s OnDemand Online trial this morning, we took note because it was the first traditional broadcaster to sign onto the authentication program. The press announcement wasn’t exactly jam-packed with details, so we contacted CBS Interactive President Quincy Smith, who gave us a little more insight.

First, Smith stressed, “This is a trial, not a deal.” He said OnDemand Online needs to overcome several hurdles before it can get more permanent access to CBS content:

  • It has to be easy for users to adopt. “They’re not going to spend more than a second futzing with it,” said Smith.
  • It has to be wrapped in some third-party referee metrics like Nielsen so that those viewer numbers count.
  • There has to be an ability to get this done with more multichannel partners, not just Comcast.
  • Advertisers need to sign on, and users need to be comfortable with the thought of more ads.

That bit about more ads caught our attention. Smith said that the OnDemand Online trial would let CBS “borrow some of the TV economics” to be able to better pay for the production of premium content. As we’ve written, video online can charge higher CPMs than broadcast, but the frequency cap limits how much can be made, and digital revenues are still dwarfed by traditional TV. “In the near term that means greater ad frequency,” said Smith, so you can expect more ads with the CBS shows you watch in this authenticated scenario than what you are used to experiencing online.

Increased ad viewing on top of a subscription fee will most likely raise the ire of online TV watchers who have grown accustomed to the minimalist, Hulu-like approach to advertising. But Smith was quick to say that his network is committed to “non-exclusive and open relationships” for its content, and he’s looking to establish relationships with “bandwidth providers” that can authenticate.

In terms of content that will be made available OnDemand Online, “Right now we’re exploring contributing content that includes entertainment and news, current and library, exclusive and non-exclusive,” said Smith. He added that the trial may incentivize some content owners under CBS’ umbrella to unlock content and put it online.

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