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Video news leads online push

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News organizations of all stripes are scrambling to tout their online video news capabilities.

The reason is simple: These organizations see an opportunity to garner advertising dollars, both now and in the future, from video news clips, with many of those ad expenditures coming from online video commercials and other rich media executions.

And while consumer marketers such as Procter & Gamble Co. comprise the bulk of current advertisers, b-to-b marketers, including General Electric Co. and Microsoft Corp., are among the early adopters in online video advertising.

"I do believe it's where online is headed," said Sarah Fay, president of Isobar U.S.

The number of news organizations that have recently made announcements related to their online video efforts is remarkable:

• Yahoo! News announced in July that it will begin to offer video news from CNN.com and ABC News. The portal already has video deals with Reuters and the Associated Press.

• The AP also announced last month that it will create an ad-supported online video news network for its members, most of which are newspapers. The network will be "distributed," according to AP's Jane Seagrave, director-new media markets, meaning it will reside on individual newspaper sites.

• CBS Digital Media and CBS News unveiled in July an ambitious plan to create a 24-hour news channel online, with heavy use of ad-supported video news, to "bypass" cable television.

• MSNBC.com attributed, at least in part, its growing number of monthly unique visitors to its free video news service.

• CNN, which had offered subscription video news, recently introduced free video. Susan Grant, exec VP-CNN News Services, also said in an interview that CNN.com will introduce a premium subscription video news service later this year that will not be ad-supported.

• CMP Media in June launched "The News Show," an online video newscast covering b-to-b technology issues. The program appears on TechWeb and has attracted sponsors such as Lexmark International and Computer Associates.

This flurry of activity appears to be an indication that the long-promised media convergence has finally arrived. Though their origins are in disparate media-ranging from online (Yahoo! News) to newspapers (AP) and from broadcast television (CBS News) to cable TV (CNN)-all of these news organizations now compete head-to-head in the same medium: the Internet, and most of them are using text and video.

Dow Jones & Co., which publishes The Wall Street Journal, made an online acquisition earlier this year that was in part intended to strengthen the company's presence in online video news.

"One of the attractions to Dow Jones of MarketWatch as an acquisition was the pioneering work that the MarketWatch site does in integrating text and video," said L. Gordon Crovitz, president of Dow Jones Electronic Publishing. "The MarketWatch home page has prominent links to high-quality online video, often on the key stories of the day. At the Wall Street Journal Online, we now have a new Video Center that features about a dozen online video business news items from our Dow Jones-CNBC joint venture."

Broadband rise drives video

It's indisputable that video is becoming an increasingly important part of online news. It is driven by the rise in broadband usage, which has helped create a critical mass in online video news viewership.

"In the past six months, we've had about 250 million streams," said MSNBC.com General Manager-Publisher Charlie Tillinghast. "Six months before that it was half, about 125 million streams."

Advertisers, of course, go where the audience is. In addition to a growing audience, video online offers other attractive features to ad agencies and marketers. "Ad agencies traditionally love creating video," said Jeff Dearth, partner at media investment bank DeSilva & Phillips. "It's sexy, and they have nice margins on it."

For marketers, video offers other advantages. "People respond to the emotional power of video," Isobar's Fay said. She also pointed out that video online-especially compared with a TV spot-can have incomparable targeting, interactive and measurement potential.

More Precise targeting

For b-to-b marketers, the ability to target with video online can be much more precise and less wasteful than a typical cable TV buy. Many general news sites are not yet targeting ads for video news, but vertical sites with video news-such as CNET Network's News.com and ZDNet and CMP's "The News Show"-offer natural niche audiences.

On CNET Networks, for instance, Microsoft ran video ads for its Microsoft Office suite. CNET also created content on "collaboration," which Microsoft sponsored, said Stephen Howard-Sarin, VP-business technology portfolio at CNET.

CMP's "The News Show" offers an indication of how niche video programming might thrive on the Web. A new program is posted on TechWeb daily at noon ET. Paul Way, associate publisher-webcasting at CMP, said about 30,000 people view the program on demand between its initial posting and noon the following day.

CMP moved into video because marketers wanted it. "They were telling us that they have television content, television creative," Way said. "They were coming to us and looking for these opportunities. At the time, we didn't have too many options for video."

So when CMP created "The News Show," it didn't have a shortage of interested advertisers. The attraction for marketers is they get the impact of video with less waste than on, say, cable TV offerings such as CNN Headline News or ESPN's "SportsCenter."

Computer Associates was an initial sponsor of "The News Show," although the company didn't run a video spot. It just used its logo, according to Mike Paradiso, VP-global media director for Computer Associates.

CA ran video spots on the Web as early as 2001, but Paradiso is cautious about using the format because of the way people, especially when conducting business, use the Internet. "People visit a Web site and they're in and out in a few minutes," he said. "If you add a 30-second ad to that, it can take up 20% of the time people are spending on a site. You have to ask if this is the kind of experience people have in mind."
Chuck Richard, lead analyst of research firm Outsell, said that while online video news viewership is growing, the Internet is not in danger of becoming a video-only medium. "This is not a trend that will take over text," he said. "They will both be in the mix."
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