TV networks seek formula for online ads

ABC, which streams "Lost" and "Desperate Housewives" on its ABC.com site after airing on TV, is aiming to tweak its formula to make its online ads as lucrative as its TV ones.

"In order for us to drive the number up to what we get on broadcast, we have to do one of two things. We have to either increase the number of ads that you currently see on ABC.com or figure out different ways to generate value for advertisers," said Albert Cheng, executive vice president of digital media for the Disney-ABC Television Group.

"We are not at parity yet with broadcast, but the goal and everything that we are doing is to drive toward parity," he said.

The CBS experiment with "Big Bang Theory" was so successful that the network repeated the online-preview formula with two other shows, "Dexter" in February and "The Tudors," on the CBS-owned pay cable channel, Showtime, in March.

ABC, a subsidiary of The Walt Disney Co., expects to explore the effectiveness of localized advertising in test markets in the next several months, because its media player can detect the location of the online viewer, Cheng said.

Technology companies also are working to style ads that will be more interactive, leading to higher sales such as making products that appear in shows clickable or targeting viewers based on what kinds of content they have seen recently.

"Ultimately, where the Internet will really become a powerful source of revenue is that all forms of advertising will work in a highly targeted way," said Steve Mitgang, chief executive of Veoh, a Web site that streams ad-supported shows. For TV shows at least, ad-supported free viewing online has proved more profitable than fee-based video downloads on services like Apple Inc.'s iTunes, said George Kliavkoff, chief digital officer of NBC Universal.

NBC Universal, a unit of General Electric Co., stopped supplying its hit TV shows to iTunes last year. Instead, it teamed up with News Corp. to launch hulu.com, a Web site that went public last month and streams shows like "Battlestar Galactica" and "The Office" for free with ads.

The NBC Universal-News partnership, as well as CBS, are testing a "ubiquitous" approach, making their content available across dozens of Internet partner sites, including YouTube, rather than drawing viewers to a single destination.

It's not clear which model of delivery will prevail. None of the networks disclose how much ad revenue they collect from online show streams, but all have made major investments in what is a growing business.