All about Web TV

1. Mike Rich, CEO of sports and entertainment at Group M, believes the deal will set the formula for many brands and their agencies in the increasingly fragmenting and converging Asian media landscape.

"Brands are seeking how to integrate their brands on the internet TV platform because, fundamentally, the old interruption model of advertising is coming to an end," he says. "Producing a full blown, 13-part half-hour show that sits on a terrestrial broadcaster in prime time, is very labour intensive and takes a huge amount of time and investment - and there's little guarantee if the show will be a success."

Rich adds that in those markets with higher broadband penetration, including China, Singapore and Australia, digitally distributed content is "a better test bed" for ad-funded, brand contented programming to combat ad skipping.

2. Many agencies are watching the partnership closely, and this shift toward custom targeted, on-demand integration, is widely viewed to drive up brand engagement levels measurably.

Cheuk Chiang, CEO of PHD, believes many Asian cable companies will be "heavily shifting" towards the Starhub model. "It's a huge money making opportunity for them. Operators will be able to avoid massive rights fees, take full control over original content and monetise it at a fraction of the cost. "

Chiang says the concept is a "fantastic testing ground" for content development for better defined audiences - without risking millions of dollars on mainstream premium content placements.

"Brands get the benefit of trying out new theme associations and measuring return, whilst agencies get a chance to crack open consumer insights on a very intimate level with consumers."

3. Rich says TV and internet technology is now high enough to warrant the move towards high standard integrated content - and he's is advising clients to jump on board.

"Starhub is poised to launch its internet TV service and we are working with 30 of our clients to see what programming budgets would fit with their brands and which we would look to launch on the Starhub TV platform," he says.

4. Rich agrees that queries over costing and profitability "are tough questions to answer", and depend on quality and the level of production.

The general consensus is that it will be critical to build the content alongside the client's marketing brief to insure there is an aligned and shared investment from both sides. "The content investment can be risky if you don't already have advertiser backing," says Chiang.

"The risk to the cable company is minimal given the infrastructure already in place and the rights fees are virtually zero."

5. Kenny Bloom, CEO VisiTek Holdings, has reservations about the model, however, claiming clients "don't really understand [the internet TV] concept and want it to be a long form commercial, when it should just be soft advertising."

Ultimately, he says, this will be a viewer turn off. "That leads to problems. Too much branding in the content means it is useless after the campaign has run, and this means there will be no secondary distribution market for the content. The online video industry will not flourish until TV ads find their way onto the video sites in a scale that can support the bandwidth and content costs. At this moment, and in the foreseeable future, the math just doesn't work."

Rich says he takes on board Bloom's comments but believe the model will be profitable.

"We think the maths do work as things are much more scalable. If people are not clicking and staying to view, then we know the content is not engaging enough. It's much more of an art than a science."

What this means for...

ADVERTISERS

• The new model offers much shorter lead time and production costs are also much lower.
• Because of online feedback from consumers, in terms of consumption, it's far easier to know whether the show was a hit of not.
• However, brands still need a better understanding of the concept and want it to be a long form commercial, when it should just be soft advertising. Ultimately, this will be a viewer turn off.

MEDIA OWNERS

• Operators will be able to avoid rights fees, while at the same time work in partnership with advertisers to ensure a profitable relationship.
• Media owners will be able to capitalise on fragmentation. They have the customers, infrastructure and technology. Web TV will allow them to build up the content libraries.

This article was originally published in the 26 August 2010 issue of Media.