Niche Media Spells Big Opportunity for Branded Content Providers

The next five years will bear witness to a number of crosscutting trends that could open the door for new, deep revenue streams for broadcast television. But, this is only a future for content providers that can develop successful partnerships leveraging on-demand, DVR and mobile formats. According to a new study by Bernstein Research, from HollywoodReporter.com, "consumers will be spending $60 billion annually on DVR-like devices, satellite radio, iPods and mobile technology driving personalized media outside of the home. One-fifth of all consumer spending will be on new content access and distribution technologies now in their early stages of growth."

Adaptability is imperative for broadcast media as the next five years will also usher in an unprecedented era of ad skipping, piracy and P2P file sharing (e.g., BitTorrent). Some estimates place losses of up to $12.5 billion in lost ad revenues (or 8% of all television revenue) during this five year period. According to Bernstein Research, by 2010 big media conglomerates that own broadcast networks could lose up to $160 billion in equity value if these trends continue.

On the flip side, however, broadcast television could stand to reap significant rewards through a plethora of new revenue streams. For example, broadcasters are already repurposing summary versions of popular programs, such as "24" and "Desperate Housewives" for "mobisodes" - video distribution via cell phone and other mobile media devises. A Bernstein Research analyst explains, "if the broadcast networks could attract a mere 6% of the 20 million women age 18-49 in the workplace with streaming media soap operas on desktops or other Internet-connected devices, they could generate $230 million in revenue at the current broadcast CPM, or $700 million at a three-times-higher Web CPM."

This is truly the tip of the iceberg for branded content providers, as well as marketers who continue to drift towards niche advertising and behavioral targeting. Merrill Lynch is predicting that online advertising will reach $12.4 billion this year and $25 billion by 2009 (read more). According to Forrester, this represents 8% of all advertising spending, which already rivals ad revenues from cable, satellite television and radio combined. This also reflects decreased, or redirection, of traditional media ad spending.

The Scripps Networks family of brands -  Food Network, Fine Living, HGTV and DIY - offers a glimpse of things to come. Living.com provides video assets from Scripps programing which have been repurposed for online delivery. And throughout, one of Scripps Networks' major off-line advertisers, GMC, has a video showroom and opportunities for website visitors to click through to their websites. With only $4 million of the roughly $241 million GMC spends on interactive advertising every year in the United States, migration to niche platforms for targeted advertising is on the fast track for rapid growth.