Those are questions that have plagued the online ad industry for the past two years as broadband penetration has grown, people have shown a willingness to plop down in front of the computer monitor for everything from three-minute clips to three-hour baseball games, and a robust market for online video advertising has developed.
Microsoft's branded entertainment
Online giants' response to this environment has varied, but it doesn't indicate a mass drive toward generating new content yet. Google hasn't shown any interest in creating its own content. AOL has been an early proponent of aggregation, working with corporate sibling Warner Bros. to syndicate second-run TV shows. Yahoo took a strong stance -- and then reversed it. Microsoft, on the other hand, has most recently bet much of its content efforts on branded entertainment.
Yahoo hedged from its early stance in which Lloyd Braun said a little too much a little too soon, declaring he would create an "I Love Lucy" moment on the internet -- a phenomenon, in other words, that would rival the one in 1950s TV when one in four households watched Lucille Ball.
Perhaps even hiring someone like Mr. Braun, a successful TV executive who greenlighted such hits as ABC's "Lost" and "Desperate Housewives," set the bar too high. Today, Yahoo does have the seeds of a very successful model in its online show "The Nine," where a charismatic VJ counts down the top nine "webfinds" of the web that day.
Just months after Mr. Braun issued a bit of a mea culpa -- a new stance, much more humble and realistic -- Microsoft Corp. announced ambitious content plans of its own. Last year at Microsoft's Strategic Account Summit, it touted a content deal with TV production company Reveille that would bring a new model to the way content is done on the web.
Offline vs. online
"Marketers have learned, as we've all learned painfully, some of the models that have worked in other media don't work very well online," says Gayle Troberman, senior director-branded entertainment and experiences team at MSN.
For the MSN portal, which already attracted a massive audience, the fundamental question was how to get people to spend more time on the site.
"Big growth comes from deepening the relationship with the audience," says Rob Bennett, general manager-entertainment and video services at MSN. "If you can get everyone to do one or two or three more things, you become a more central part of their online experience; they become more loyal, and they become more valuable to advertisers."
That was the primary reasoning behind adding original content to MSN. The portal launched its first original material last year with a show called "Fan Club," which followed an Illinois minor-league baseball team, the Schaumburg Flyers. It was interactive -- viewers could vote for the lineup and be voyeurs in the dugout and locker room. The show didn't get great audience numbers, but it proved that people viewing the series stayed on the site longer and became more involved.
Reveille deal rolling
Microsoft's Reveille partnership was created last spring. MSN would seed a production fund that Reveille could draw upon to develop pilots for the 10 shows to be produced as part of the deal. MSN has right of first refusal on web shows and content Reveille produces. The production company will pitch a slate of ideas, some of which will be greenlighted right away; others will be shopped around to advertising customers to gauge interest. Sometimes the show ideas will come from MSN's discussions with marketers-identifying a particular need and bringing it back to Reveille.
One of the first series spawned was "Chef to the Rescue," meant to be an edgier approach to food programming. MSN shopped it around to the usual package-goods marketers, and Kraft Foods was interested. But Kraft said suburban moms were less interested in sitting down to watch funny, entertaining cooking content online than they were in using content that would help them plan better meals. Could MSN program the show in that direction?
Having the marketer at the table right away helped guide the direction, Ms. Troberman says. She took the idea back to the creative folks at Reveille, where "we had our moments," she says of the reception to the change in direction. But "we learned a lot about the consumer who really was the target for this kind of programming."
Working with up-and-comers
Microsoft knew it had to create online content differently from how the big-budget studio world goes about making hit TV shows. After all, the economics are very different. Mr. Bennett says in the case of "The Big Debate," they created -- for the price it would cost to make a fairly low-budget 22-minute TV pilot -- 20 three-minute episodes. The trick is eschewing established writers, directors and talent in favor of up-and-comers. They're edgier and less expensive, Mr. Bennett says.
Marketers are figuring that out as well. Anheuser-Busch has launched Bud.tv relying on such talent, and American Express Co. has a content studio.
Despite the interest in online branded entertainment, one of the biggest challenges remains building up strong enough reach and frequency to break through.
"Building an audience takes time on the web because usage is so distributed, even more than diversified TV viewing of today," Ms. Troberman says. While some brands have produced stellar virals, for every one that's a hit, many go unwatched and unnoticed.
A portal's reach advantage
MSN maintains that a big portal can provide frequency needed to build an audience. "Kraft's investing in a season of 'Chef to the Rescue' gave us six months to get it right," she says. "We can find those consumers across Live Mail, Messenger, Office Live, the MSN home page, MSNBC, even Xbox, and remind them to come back."
Adds Eric Bader, senior VP-digital at MediaVest, New York, which worked with MSN on behalf of Kraft: "If you want to put on a film festival a long way from the highway, good luck. But if you have an exit and a lot of signage around it, you're going to do better."
Of course, there's a trade-off to partnering with the people who have distribution. Video assets owned solely by an advertiser, as opposed to those co-created with an online partner, aren't beholden to the restrictions of a media company and can travel around the web however the marketer likes -- and, Mr. Bader says, can be amortized over other exposures, be it on a brand's own site, on TV or on video-on-demand.
In the past year, since the MSN-Reveille deal was announced, Mr. Bennett says he's met with a "wide range" of producers, directors, writers and talent, from the young up-and-comers to established show runners. The lure is the ability to do something free of the constraints of TV or film's conventional time blocks and model.
"Online is a way to go out and try to tell stories in a different way," he says.