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Ads explode on long-form Web content

The PC is no longer just a place for watching a couple of minutes of online content: This year, long-form TV and movie viewing on the Web took off. Ad-supported Hulu.com and NBC.com, the subscription-based Netflix Web portal, and pay-per-view download sites such as Amazon.com and Apple’s iTunes each feature full-length shows and features — and are gaining popularity.

According to Forrester Research, as of this past summer, 64% of US online users watch video online in a typical month, and the average viewer watches 56 minutes of online video a week. Half of online video viewers watch feature-length shows, up from 24% of viewers at the start of the year.

“I think 2008… will be remembered as the year where we went from thinking, ‘something is going to happen’ to ‘some­thing is really happening” for feature-length online content, says James McQuivey, VP and principal analyst at Forrester.

Hulu.com launched in March. By September, it was reporting 142 million streams each month, according to Nielsen VideoCensus. To put this in perspec­tive, this is “just below” the number of subscribers Comcast gets for video on demand, McQuivey says.

“There is a lesson in this,” McQuivey adds. “[Viewers] want control over when they watch. That small piece of value drove 30 million people to buy DVRs in the past few years. It wasn’t to skip ads, which you can see because you can’t skip ads in online viewing and yet people still watch. It isn’t about anti-advertising, it’s about convenience.”

While television is certainly not going away soon, more marketers are buying advertising on the new online TV net­works. At the end of 2007, Forrester fore­casted that in 2008, online video ads would generate $989 million in revenue. While it is too early to see if this prediction came true, Wal-Mart, Acura and Procter & Gamble all run ads on the online networks.

Unlike a TV ad, however, users can interact with a Hulu ad by clicking on it to connect to the brand’s Web site. Users also can vote on whether or not they like the ad. If this medium continues to grow, as it most certainly will, advertisers are going to have to think about the format of their creative to make it work for the Web.

“You can’t just shorten a TV spot to run online,” notes McQuivey.

According to Forrester, the average adult watches 28 hours of television per week, which means that online viewing is only 3.5% of total viewing for the typical online user. Interactive features — as well as the opportunity for measurement — have turned television advertising into a direct marketing channel. Plus, the video ads can run in conjunction with other ads on the page, such as a banner ad on the site above the video screen.

McQuivey estimates that if every hour of video has an average of 10 video or companion banner ads in it, just more than 1 billion video ads are served each week — about 57 billion ads per year.

But not everyone is seeing an immediate shift to the Web. Steve Swasey, corporate communications manager at Netflix, says that while streaming is becoming more popular among its 8.7 million users, “it’s still a DVD world, and it will be a DVD world for many years to come.”

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