Trading Analog Dollars for Digital Pennies

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  • on November 29th, 2008

Great weekend post over on Fred’s Blog and the discussion has a lot of smart media people chiming in on the subject. Take the time to go read it and all the comments. My friend Darren Herman added this:

This conversation is a great one with lots of extremely quality people contributing. I’d like to add the following:

1. We’re still in diapers. The digital video conversation (as Mike Su rightly points out: browser based video, and Internet delivered TV content) is in early stages. We’re not going to know how this plays out for quite some time, but the people reading this (and like people) are the ones who will probably figure out where the future takes us.

2. The big dollars in advertising today are locked in Television. Go to any major media agency such as Zenith Optimedia, Mediavest, Universal McCann, and others and try to digitally get a portion of their pure television budgets. It’s probably driven many a sales person crazy. The TV buying units (both national and local) have the majority of dollars for both brands, have been doing so since the 1940s, and know/understand and have built tools all around buying television in all of it’s dayparts and intricacies. While some agencies are testing an integrated buying unit of both traditional TV and digital, it’s in infancy and the majority of dollars are not there yet.

I think there is another way to look at this conversation. Now that you, me, my grandmother, and my child has access to a digital camera and camcorder (the nikon d90 has video capabilities) as does my Apple iMac, we expect that if we produce a piece of video content, and get it hyperdistributed on iTunes, MySpaceTV, Revver, Blip.tv, and any other platform, it should have advertising dollars find it. Every single Mac sold from a few years ago, going into the future, literally means that there is a content creator who can now fight for digital video advertising dollars. Should this be the case?

The early days of the video game (today) are going to have the real big winners focus on Internet Delivered TV Content, a la Hulu. Why? It’s purely a business model question. The dollars moving online from TV budgets are going to find the TV shows that media buyers are already buying on traditional TV. Whoever can lock up agreements with the TV-networks and distribute their shows, both current and back catalog, is going to win the early days.

Once media planners and buyers understand digital video (we’re still in diapers, remember), the dollars may cross the lines into other areas of digital video, as Mike Su says, browser based video. You are going to have a very hard time however of convincing a big brand who is cognizant of their placement to surround a YouTube video of people jumping off the roof of a house and getting injured or surrounding a UGC clip on Justin.tv of the recent tragedy.

Sorry for the rant.

Originally posted as a comment by dherman76 on A VC using Disqus.

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