I have been involved many discussions about how to monetize video on the web for a long time. Many people believe that advertising will be the main model used to gain revenue for video on the web. You hear a lot about how the internet is vastly superior to television in reaching your target consumer because it gives you a laser like focus on the consumer who is really interested in your product and you don’t have to pay for reaching those who are not your target.
This position asserts that advertising is best done online because it is more efficient and more effective in getting consumers to buy. Real proof is yet to be established for this proposition but it is asserted anyway and treated almost as the gospel truth.
Let me make a counter assertion. The most powerful tool to create consumer demand for a product ever invented is the TV commercial (in its 15, 30 or 60 second form). Nothing, so far, has been created that competes effectively with this form of advertising in any other form of media known to humankind (thus far!).
When a TV commercial campaign works, it drives huge awareness, and creates an enormous desire for consumers to buy, buy, buy. Any attempt in any other medium to create the heights of either awareness or “desire to buy” in a consumer has yet to come close. This does not mean that every commercial works (or that every product is good), it just means that this form of advertising is miles ahead of anything else when done well (and sometimes even when done poorly).
When Apple launches a new product it blitzes TV with commercials that create huge consumer demand. In addition they also create huge buzz in the culture at large, with free word of mouth that reverberates day after day after day. So we have to ask a question? Is Apple not internet savvy? I would say yes. Then why would they spend most of their money on TV advertising, on the TV commercial? Are they wasting their money by not targeting their consumers as they can on the internet? I would say no, because they understand that TV commercials deliver a bigger bang for the buck than any amount of advertising they could buy on the internet.
And further, when HULU wanted to increase their audience, did they spend money advertising on the internet? No, they bought a super bowl ad. Did it work? Yes, their traffic rose by a huge amount following the super bowl.
Now the question is—what will replace the TV ad on the internet that will create the same desire to buy? Do companies just move their TV commercials online? Or do they try something else? Can the TV commercial be replaced by something else using video on the internet that is just as or more effective?