Video Ad Demand Burgeons But C4 Expects Prices To Fall

Cosmo Lush (4OD), Raghav Gupta (Brightcove)The fabric of Channel 4 is at risk from the migration of advertising revenue from TV to the net – but the rise in online video portends further falls in online ad cash, Cosmo Lush, head of product development for the channel’s 4OD on-demand service, suggested.

Lush (pictured left) was speaking at Web TV Takeover, a Chinwag panel event in Soho, London, tonight. Asked if online would vacuum up C4’s TV revenue, Lush pointed to the company’s request earlier this year to Ofcom for extra funding, conceding: “We need support because our (TV) business model doesn’t work. One of the very fundamentals, which is the revenue driver, is changing very (quickly).”

4OD, which launched £0.99 downloads in December, recently added free, ad-supported shows to its roster. It was, Lush said, in response to “very strong demand from the advertising community for pre-roll inventory – that’s the next step in a long evolution”. But he reckons a looming explosion in the number of video sites available to advertisers could drive down the sums that can be charged: “I think, over the next few months, we’re going to see a huge upsurge in available supply of ad inventory and that’s going to have some quite significant effects on prices.”

Join the dots, and it’s a challenging time – not making enough money from the traditional TV business, and the prospect of a flood of new video players driving down the cost of ads as soon as the game has begun. Not to worry too much yet – Channel 4 is trying a broad mix of models to cover the bases until such time as the way becomes clear.

Lush: “Subscription is extremely difficult to launch in any context. We haven’t launched a subscription product on 4OD but we’ve been watching the market a lot.” He said he wouldn’t rule out adding subscription to the pay-for and ad-supported models already used. He conceded “the lack of original content (on 40D) is a real gap” and hoped to beguin distributing original commissions via the platform “very soon”.

Fellow panelist Raghav Gupta (pictured right), Brightcove‘s VP international partnerships, who relocated from the US to London only yesterday: “The demand (for pay-per-view) is, at best an ancillary and fairly incremental business line for people. What we’re seeing is a burgeoning demand for ad-supported content, both from an end-user perspective and also from the advertising community.”

Gupta on YouTube’s recently-launched overlay ads: “(Agencies) are not used to creating that kind of creative for online. Then, even if they do the creative, or if you the publisher actually do it for them, they then have to run it back up the chain to get approval from the actual client – that takes time.” But he was confident YouTube’s roll-out will eventually popularise the format amongst advertisers.