Will the Broadband Revolution Be Televised?

Now that household broadband penetration may be approaching 20% and much at-work Web access already comes through fatter pipes, an old argument is being made anew: all media brands need to get a video component. "Five years from now, you will see every major content creator doing content this way," says Jon Klein, FeedRoom CEO (www.feedroom.com), which boasts 20 million news and information video streams a month for major brands such as NBC, Tribune, and HBO.

Well, maybe. Despite massive interface improvements in consoles (like Klein's excellent FeedRoom) and more fluid, responsive streaming generally online, even those of us who've had fat pipes for the past five years still think twice before clicking on a video clip. Add to that the prohibitive cost structure associated with moving a text brand like a newspaper or magazine to video production, and the whole notion that video will be an indispensable piece of broadband programming remains questionable.

Nevertheless, a few media brands have discovered that by outsourcing some online streaming tasks (hosting, interface development, and bandwidth) a text-based brand can move into video without busting the budget. Business Week Online (www.business week.com) started posting its own video clips of executive and analyst interviews in 1999. The company created a small studio space in its newsroom, a two-camera set-up, and hired two FTEs for shooting and editing. Otherwise, the operation simply leverages existing assets: editorial staff who can do the on-air interviews with subjects already coming through the BW office.

After hosting and streaming these videos on its own for years, last November BWO opted for a more efficient system by expanding an existing corporate relationship with Klein's FeedRoom. In addition to aggregating streams from media brands, FeedRoom offers a private label service, which lays the BWO brand on its highly evolved video console, hosts the streams, and shares a sales force that has been selling ad placements in the online video platform for many years. Klein gets a marquee brand like BWO, and BWO gets affordable video delivery.

"It was profitable from the get-go, says Howard Manus, VP of operations at BWO. "FeedRoom leveraged a lot of their infrastructure and costs so we weren't putting a lot of investment in it." Klein boasts that running 110 streaming sites together lets FeedRoom charge corporate and media clients a "low monthly cost. We achieve great economies of scale, extremely low bandwidth prices."

Using a combination of existing FeedRoom ad inventory with clients that its own brand attracts, BWO realizes approximately a $50 CPM rate on flash and video ads placed at the beginning of each stream. Ameritrade, GM, Monster.com, and Windows XP were among its clients last year, and typically, FeedRoom has a 50/50 ad revenue share with its private label partners.

Overall, Klein reports high client interest in this sort of way-beyond-the-banner ad placement, pushing revenues up 400% last year and putting FeedRoom within a quarter of profitability. Clickthrough rates on ads within the main video screen are about 3%, and recent post-campaign branding studies by Dynamic Logic found one ad giving its brand substantial "lift" in some of the traditional offline ad metrics like message association and intent to buy.

Despite FeedRoom's excellent private label app and no matter how enamored fickle ad execs may be with the unique formats streaming allows, video content still needs to position itself better within the larger mix of online content if it is going to be a substantial aspect of the broadband experience. BWO has had these streams for several years, and a good percentage of site visitors come in through at-work fat pipes. Nevertheless, according to Manus,"It's still not a huge part of the site, but it's growing."

Manus recognizes that keeping his video content in its own silo at the site has limited its use, so he is about to experiment with weaving the video links more effectively with the dominant news streams. "Its ultimate popularity will be a function of how much we promote and integrate it with the rest of the site," he says.

BWO and FeedRoom demonstrate that careful outsourcing allows a content provider to dabble in video streaming without massive investment. This is a good thing because, frankly, streaming video needs a lot more room and time for experimentation before it becomes an essential part of the emerging broadband experience. The fact is that few news and information nuggets online actually benefit from video, so the clips really need to offer users a compelling reason to click, load, and watch. Dumping video online just because we're able to runs the risk of depreciating the value of streaming media in the eyes of users altogether. Like page design, article length, and even banner placement, video streaming will need a long period of trial and error before we begin to understand whether and how Internet users really do want Web TV.