In the Vortex — Emerging Video Ad Formats and Business Models

Dianne Mermigas of the Hollywood Reporter has a terrific article discussing the impact Google and metric driven web advertising will have on the still much larger TV advertising business. (Hat tip: Heavy founder Dave Carson).

Boiled down to its essence, the article makes a few elementary — but big — points.

Mermigas’s broad thesis is that “Internet-related practices and values are fast becoming common place, and altering old media’s business models and expectations. The rapid adoption of digital broadband media applications is bringing us to the tipping point. You don’t hear much, if anything, about advertising resisting the change, especially when the giant likes of Google and Yahoo! are tripping over each other to quantify and qualify every legal and ethical detail about the individual users they are delivering. ”

As traditional media practices and business models morph, expect changes to many tried and true media conventions.

First, the age old ritual of TV’s “up front” ad buy, in which media buyers and sellers converge on Madison Ave. to negotiate the following TV season’s ad buy en masse, is short for this world.  In its stead will be something along the lines of Google’s auction system, which attributes value not to a piece of content and its ratings but to the actual connection of relevant viewers to marketers.

Second, unlocking the value of this more direct and accountable connection will allow ad-based programming to replace the notion of paid access to content.

Finally, Mermigas predicts that advertisers and programmers alike ultimately will dissolve the dichotomy between the different platforms and evolve a set of formats across platforms.

“The nagging dichotomy between advertising form, function and price on traditional TV and on the Internet is in the process of rendering a new hybrid standard to extend across all media platforms. But this year, it is much more than an “either-or” ad spending proposition. It is about reinventing the effective and innovative ways advertisers and target customers interface in a global marketplace on fire with interactivity. Even if traditional media’s structural and psychological transformation don’t occur fast enough, advertisers now appear willing to break from convention to follow targeted consumers into customized, niche spaces. That’s the difference a year has made.”