4As Management 2006

Media stream hits resistance

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Streaming media-live audio and video content transmitted over the Web-could become one of the next big Internet advertising opportunities, yet media buyers and planners are cautious about making the next move.

"I really do think it's the future," says Reyn Leutz, senior partner and associate director of national broadcasting at MindShare USA, Chicago, the combined media unit of WPP Group's J. Walter Thompson Co. and Ogilvy & Mather World-wide.

But "the streaming audience at the moment is small and fragmented," so currently streaming media makes more sense for advertisers such as Web-based or direct response clients rather than broad consumer-products marketers, Mr. Leutz says.

SEARS TEST

Ogilvy currently is testing streaming advertising for American Express Co. and Sears.com, the Web site of Sears, Roebuck & Co.

So far, most streaming media consists of live radio and music broadcasts that listeners can tune into through their computers.

These broadcasts are increasingly supported by 15- or 30-second audio commercials, accompanied on-screen by graphics from the sponsors, appearing between songs. Video streaming will work the same way, but that part of the technology is restricted by its need for widespread consumer broadband access for smooth execution, say industry experts.

"At the end of the day, [audience size] is what it's all about," says Natalie Swed Stone, managing partner-director of national radio services at Omnicom Group's OMD, New York, which is discussing the possibility of streaming advertising for clients like Wm. Wrigley Jr. Co.

But those selling the medium claim the audience is there.

"There are a lot of differing opinions as to ... when it will reach critical mass, but there aren't really differing reports" on the amount of inventory, says Warren Schlichting, CEO of Hiwire, which delivers and sells targeted streaming commercials inserted into live audio and video streams. "The industry as a whole is growing quite rapidly, so I think we'll see those complaints [about a lack of critical mass] lessen over time as this thing gains momentum."

MUSIC STREAMING

RadioWave.com has been promoting audio streaming for three years, and in the last year has signed a number of national advertisers to its site-based music channels. RadioWave provides 20 music channels on Rolling Stone's Web site (rollingstone.com). Advertisers offering 30-second spots on those broadcasts recently have included Allied Domecq Spirits USA's Beefeater gin, Fox Broadcasting Co., Flowers.com and Office Depot, says Berry Meyerowitz, RadioWave's VP-marketing.

RadioWave signed on this month to provide audio streaming for the WB network (thewb.com), Mr. Meyerowitz says. RadioWave provides streaming to more than 30 major Web sites, and the banner ads providing visual support for its audio ads are interactive, averaging 125 by 125 pixels and allowing consumers to link directly to an advertiser's Web site.

"The ideal type of advertiser is one who is promoting a catchy image or a call to action," Mr. Meyerowitz says.

By 2005, streaming advertising will reach about $1.4 billion, or close to 10% of total online ad spending, according to a Jupiter Research study. In the next five years, online radio subscriptions are expected to grow to $1 billion, the December study estimates.

"When you talk about [streaming] video, penetration is very, very small," says Jupiter Research Senior Analyst Marissa Gluck. "When you talk about [streaming] audio, I think we're starting to hit critical mass, but it's still relatively fragmented. We're not talking about huge numbers yet."

JURISDICTION QUESTION

Another barrier to getting more advertisers to sign on is that it's unclear which media agency discipline has jurisdiction over streaming media. Harvey Goldhersz, president of Grey Global Group's interactive media arm MediaCom Digital, New York, was instrumental in forming the Streaming Media Advertising Advisory Council last summer to address some of these issues.

SMAAC has held two conferences for its 200-plus members, representing agencies, advertisers, and streaming ad and content providers. The council was formed to encourage communication throughout the industry.

"It's as basic as clarifying who buys and sells the medium," says Mr. Goldhersz, who is SMAAC's chairman. He adds that MediaCom created a structure to allow online and offline media buyers to work together on streaming media plans. "I can't speak for other agencies, but [this method] definitely works very well for us," he says.

`LONG-TERM PROPOSITION'

The consensus among media buyers is that the streaming world cannot be ignored, yet time is still needed before its full potential is reached. "I think this is a long-term proposition," Ms. Swed Stone says. "It still hasn't been determined what the best way to advertise is, what the best way to build a [streaming media] site is and what the best way to market that site is. It still has to be ironed out."

"I don't think the penetration is at the levels yet where it becomes part of every single buy," Mr. Leutz says, "but it's important to gain learning now because I definitely think that it's the future."