NEW YORK (AdAge.com) -- In the infant business of streaming TV shows online, media companies have long been wary of putting digital viewers off with too many ads. But in what could become a tipping point, a new study finds that web viewers have a much greater tolerance for ads than expected.
Turning the long-held tenet about web video on its head, the CW network has discovered that online fans of "Vampire Diaries," "Gossip Girl" and other fare in September watched fully 95% of the commercials that accompanied the streaming of the show to completion -- and 97% of them to their midpoint. And this is after the CW started this season to run nearly as many ads online as it does on TV.
The results, as determined by data the CW is using from ComScore and DoubleClick, "dispels the myth that the online consumer will not watch commercials," said Rob Tuck, exec VP-network sales at CW.
"I do think this will generate a change in the business model," said Rino Scanzoni, chief investment officer at WPP's Group M. "Up until this point in time, there was this pushback issue about acceptance of commercial messages" online, he said. "Clearly people are willing to accept advertising as they do on television in exchange for content."
The CW's effort comes as some forces in the industry are working to ensure online viewers have more ads to watch. Nielsen has for the last few months been working on data that would take into account viewing of commercials that run in a particular show no matter whether they are seen online or on TV. For Nielsen to be able to provide the commercial rating, however, shows seen online will have to have the same group of commercials that run on TV. If this system were adopted en masse -- and it's not clear that it would be -- online viewing might be crammed just as full of commercials as the more traditional TV-watching experience. The company expects to start making such data available in April, a Nielsen spokesman said.
With more viewers getting their boob-tube fix by streaming favorite shows on the computer screen, TV networks and advertisers may have little recourse. Besieged by ratings drop-offs for their traditional TV programs, they may have to force new ad intrusions on consumers who had grown accustomed to seeing less commercial clutter online.
Fewer viewers tuning in to "One Tree Hill" or "Grey's Anatomy" on TV, after all, means the networks can't charge as much for commercials, and marketers can't get the reach they once knew the venue regularly delivered. By devising a system that measures viewers in as many different venues as possible, TV networks might be able to keep the ad cash coming in while stabilizing the ratings erosion that has troubled them for at least the past decade.
If CW viewers are spending more time online, said Mr. Tuck, the network wants advertisers to compensate them for it. "Our demographic is certainly going to go online," he said. "We do feel this is a big part of the CW and has to be taken into consideration."
The CW raised eyebrows earlier this year when it announced it intended to sell combination packages of TV and online ad inventory. The network started pondering the idea when executives noticed positive growth online for programs such as "Vampire Diaries."
CW uses online-impressions data from DoubleClick as well as Nielsen VideoCensus video-streaming data to give advertisers a sense of how its shows are watched online. Mr. Tuck said September data shows the CW delivered 99 million ad impressions to its total viewers -- an increase of 330% over last September -- and that viewers spent an average of 56.7 minutes watching.
The CW audience, however, may not be typical. The network routinely programs to reach predominantly female viewers between the ages of 18 and 34, not to mention the occasional sci-fi fan peeking at "Smallville" or "Supernatural." Those viewers likely feel more at home watching a TV show in a digital fashion. Mr. Scanzoni thinks online viewers may even want to watch more ads -- the theory being they are becoming more sophisticated, and have grown tired of the current ad model, which often consists of running the same ads from one or two advertisers throughout a single streamed episode. "When you have a high frequency of specific advertising, you will turn off the consumer," he said.
Not everyone will agree that online viewers are ready for more ads. At Hulu, for instance, running fewer ads still holds sway. "Our experience has shown that a lighter ad load is a better experience for users and much more effective for advertisers," said a spokeswoman for Hulu, which is owned by NBC Universal, News Corp and Walt Disney. At ABC, which has garnered some distinction for the way it mixes ads with the streaming of its programs, each break typically sports two 30-second ads, said a network spokeswoman.