media madness

March Madness is a wonderful time of the year, especially when the Hawkeyes lose in the first round. This year things were different and it had nothing to do with basketball. CBS broadcasted all of the NCAA Men’s Basketball tournament games via the internet. Below you will notice how I was able to watch all four games simultaneously in my living room.

By the numbers:

• 2005 – 25,000 Total Viewers
• Day 1 2006 – 1.2 Million Viewers
• Day 1 2006 – 268,000 simultaneous streams
• Total thus far for the 2006 NCAA Tourny – 14 Million Streams with 4 Million Viewer
• $3.7 Billion lost by companies through loss of productivity by employees
• 19 Corporate Sponsors

The future of IPTV is now. CBS has proved the legitimacy of broadcasting via the internet. But what does that mean for the industry? I see it as an efficiency boost for media organizations and advertising agencies. Rather than lump-sum costs for spots in the Super Bowl you can pay per viewer using exact statistics of internet broadcasts.

Consider this. On day one of the NCAA tournament CBS attracted 1.2 million viewers. A thirty-second commercial on the air on average cost the advertiser (Dell, etc) around $70,000 per spot ($300,00 in primetime). Ads broadcast through the air have no defined metrics or statistics to determine the actual market reach of those ads. Instead of a lump-sum pricetag CBS can go to Dell and say, give me 10 cents per user per spot. CBS makes more money at about $120,000 a spot but Dell knows exactly where their money went. Both sides are happy.

So why do you think Google is buying up copious amounts of dark fiber all over the nation? I see two possibilities. The first is the offering of free WiFi which they have begun in areas like San Francisco. Giving away wireless internet can be a very lucrative opportunity for Google. If it’s their network, they can run ads on it. They have solved the issue of localization because they are the local ISP. With this in place Google can target ads down to a single hotspot at Starbucks downtown next to Younkers. Who cares if they are giving away the connection? They are making more than what they invested back in advertising.

Secondly, as companies like AT&T and Comcast start thinking that they deserve streams of revenue from both directions (consumers and content providers) there’s a great opportunity for disintermediation by Google using their network of fiber. There’s a great opportunity for Google to become the primary backbone for architecture needed to supply IPTV on a mass scale. What does that mean? I call it extreme targeted advertising. Google knows I am sitting in Des Moines, IA watching Seinfeld at 11:00pm every day and so on. That knowledge will be essential for ‘Extreme Targeted Advertising’.

As more and more companies adopt the internet as a mainstream content delivery method we will begin seeing many waves in the area of advertising and delivery. Looks like Google and CBS are pretty far ahead. It should be fun to watch (pun intended).

tags: internet, business, technology, media

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