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Agencies Predict Growth in Webcast Ads

Although only one of five ad agencies that buy online advertisements on behalf of their clients have purchased Webcast, or streaming media, advertisements, agencies have high hopes for the future of the format, according to a new survey by Arbitron Internet Information Services.

The survey consisted of 100 interviews with senior executives at traditional agencies, interactive agencies and buying services in more than a dozen major cities in the US.

The study found that 69 percent of agencies using Webcast ads plan to use them more this year, and nearly all of the agencies plan to spend as much or more this year than they did last year. So far, though, these agencies are only spending five percent or less of their Internet budgets on Webcasts.

Of those agencies that hadn't used Webcast advertisements, more than half (56 percent) planned to use the format in the coming year. Eighty one percent of ad executives surveyed believe that the format will grow significantly in the next three years.

A lot is riding on the success of streaming media ads, especially for entrepreneurs develop broadband content sites. Ads in streaming media -- that usually mimic television or radio ads, but are often shorter in length -- are a format on which a number of start-ups are basing their business models.

Advertisers and agencies, too, have high hopes for the new format, as it has the promise of being more engaging than banner ads, while still retaining the interactive and targeting aspects.

"Many agency executives believe that Webcast ads are superior since it will allow for consumer interactivity and provide targeted, compelling content -- delivering both audio and visual information," said Bill Rose, general manager and vice president, Arbitron Internet Information Services.

"Webcasters need to educate advertising agencies on the viability and effectiveness of Webcast ads, especially since 'Streamies' or online listeners and viewers are a new breed of consumers."

The preferred buys, by those who are using streaming media ads, are on Internet only channels, although existing radio and television stations are also getting some ad dollars.

Much work needs to be done by those content developers, though, according to the survey. Almost half (49 percent) of the advertising executives surveyed have never been approached about buying this type of advertising. It's also critical that these players collect data about their users, and about the effectiveness of streaming media ads.

Weaknesses of the medium, according to the agencies surveyed, include poor penetration, technical issues, and poor signal quality.