The Rise of Online Video

Not that wee need research to verify the fact that people are tuning into online video more than ever, but the Online Publishers Association (OPA) has just released a study that says video viewing online has reached the point where it is "a routine practice" for many internet users.

According to the study, 24 percent of internet users access video at least once a week, while 46 percent watch video at least once a month. News leads the way in frequency of viewing, with 27 percent of online video viewers watching at least once a week, followed closely by funny videos (26 percent watch at least once a week). Not surprisingly, online video viewing is very common at home (39 percent of those with home internet access watch at least once a week) compared to 19 percent of those who watch at least once a week at work.

Much like general web surfing, when it comes to finding the videos they watch, internet users often rely on a handful of specific sites. OPA says that half of all video viewers go to a specific site to find video, and a majority of video viewers (58 percent) say they rely on two to five sites. Another popular way to find video is through random surfing, which is done by 48 percent of video viewers.

More importantly, 66 percent of video viewers have watched online video ads, and 44 percent of those have taken action on what they've seen. Visiting a website ranks highest at 31 percent, while eight percent are actually driven to make a purchase. Video ad watchers generally prefer short ads. However, 39 percent said they would watch ads lasting longer than 30 seconds.

Of course, when we talk about online video, we're really talking broadband, so it's worth mentioning that according to the latest data from Nielsen//NetRatings nearly 68 percent of active internet users in the U.S. had access to broadband as of February. The number of active at-home broadband users increased 28 percent-- from 74.3 million in February 2005 to 95.5 million February 2006.

Put these two studies together, and it's natural that giant print news sources, such as The New York Times and Forbes, have begun running video reports from their reporters.

NYT and Forbes are ahead of the curve, however. Most websites still don't seem to have the wherewithal to satisfy the online video viewing public. Take for example, the NCAA tournament on CBS. The great news is that media buyers were so impressed with the results of their sponsorships that they're already buying up next year's. The bad news is that CBS greatly underestimated consumer demand.

The site capped the number of simultaneous streams at 260,000, even though 1.4 million people registered in advance for March Madness on Demand, so on March 16, some 120,000 people were placed in a waiting cue to view the game.

But, Rome wasn't built in a day, so I'm guessing by next year the bandwidth supply will match demand.

In other news, Google surprised its competitors with the beta launch of Google Finance, which compiles stock information and financial news. The ratings are even more surprising. According to Hitwise, Google Finance ranked at number 28 in the Business Information category for the week ending March 25, 2006, its first week online. Yahoo! Finance dominates the Business Information category with 31.9 percent market share of category visits for that week. While Google Finance's share was only a fraction of that at 0.53 percent, Google has done little to promote the site in its first week online.

Top 10 Business Information Sites by Market Share of Visits to Category
Week ending March 25, 2006
Rank Name Domain Market Share
1 Yahoo! Finance 31.89%
2 MSN Money 11.98%
3 Internal Revenue Service 9.47%
4 CNN Money 3.83%
5 Market Watch 3.58%
6 2.43%
7 Bankrate 1.58%
8 Reuters 1.52%
9 Manta 1.38%
10 Bloomberg 1.32%

In other research news, Jupitermedia this week sold its JupiterResearch division for $10.1 million in cash to MCG Capital Corporation. Certain requirements have to be met before any money changes hands. In a message to Jupiter clients, David Schatsky, president of JupiterKagan, wrote: "There will be no immediate changes to Jupiter's products or services. Jupiter's entire team remains intact following this merger. You may continue to rely on our analyst, client services and account management teams to deliver you valuable data, first-rate analysis and high-quality support as you confront the changes the internet and emerging consumer technologies are bringing to your business."

Speaking of emerging technologies, NPR, which has had nearly 18 million downloads of its podcasts since its launch at the end of August 2005, will now deliver 45 of its podcasts to mobile phone users via Mobilcast.

In not-so-emerging technologies, Multichannel Merchant and Direct magazines recently completed a study which shows that while email best practices are in place, they're not closely adhered to (which could explain why I'm still spending a valuable chunk of time every day deleting spam from my inbox).

The study found that 61 percent of business-to-business marketers have formal permission practices for collecting email addresses, while 93 percent of consumer marketers say they have formal practices in place. At the same time, 60 percent of the consumer marketers surveyed reported using only a single opt-in method of gathering email addresses, while only seven percent used a double opt-in method. Of the business marketers surveyed, 26 percent used single opt-in methods, and just three percent used the double opt-in method.

"The email landscape is changing so rapidly right now, and many marketers are seeing a decline in the open rates of their email campaigns over the past seven quarters," said Annette Tonti, Bluestreak's CEO. "However, once opened, the click rates have slightly increased suggesting better relevancy of message. A best practice of opt-in would include gathering characteristics that enable relevancy. As a rule of thumb, the more prominent the brand, the more rigorous they are about obtaining permission. This is where privacy concerns meet brand protection. The more rigorous the permission, the better the campaign will perform."  

However, the landscape of retailers who have even just a cogent email strategy is sparsely populated. 

"We have data going back three years, which clearly shows a huge impact for consumer based marketers, particularly those in the retail and apparel markets who have initiated a consistent and well thought out email strategy," said Bill McCloskey, CEO of Email Data Source. "Marketers that provide a weekly catalog-type email newsletter find significant spikes in traffic to the website via the email channel. And these spikes are consistent, week in and week out, for as long as the email campaign is maintained."

Unfortunately, this is not a message that seems to have gotten out to the majority of retailers. For instance, in February of 2005, Email Data Source did a survey of the email sign-up practices for all the major apparel/retail manufactures that had a website. They attempted to sign up for 246 unique brands in that sector that had a web presence. Of the 246 attempts, only 71 had any type of email program in place. Of the 71 who had an email program in place, only 22 actually sent a welcome letter acknowledging the sign-up. Of the 22 welcome letters, only two were double opt-in. "So our figure puts it at 10 percent with a program in place, and less than one percent have a double opt-in program in place," said McCloskey.

Finally comes the most ridiculous item of the day and something to worry about in the grand scheme of advertising. I simply have to report that hospitals have started marketing to the affluent. Yes, you read that correctly. Some hospitals are now offering things like Nicole Miller-designed robes, concierges, in-room computers with high-speed internet access and manicures. All are offered by various hospitals in the Unites States in an effort to attract "affluent patients" in the "competitive health care market," according to one report.

Who's paying for all of this? Most of American hospitals operate in the red with only a small percentage breaking even, and the aforementioned extras are to be covered by the patients themselves. Now it looks like we're about to see a rise of hospital marketing budgets, which will undoubtedly impact all patients, not just the affluent ones. For example, the Detroit Beaumont Hospital, which spent nothing on advertising until 1999 now has a whopping $1 million yearly ad budget and runs print, radio and outdoor campaigns with the tagline, "Do you have a Beaumont doctor?"

Maybe I'm still touchy after a troubling experience in a Newport Beach hospital in sunny Southern California, where a uniformed valet parked my car (no self parking was available), but I then spent more than two hours in the E.R. waiting to be seen by a doctor. The E.R. had one doctor on duty and about 10 patients waiting, one of whom was bleeding… but we all sure got our cars parked safely under the palm trees.

I'm not so deluded as to think healthcare is not a business, but isn't this going a bit too far? Hospitals are places where people come to get better. Fast. Not to get their nails done in a Nicole Miller bathrobe while someone less affluent waits in the E.R.