Advertisers want new media exemption extended to test new video ad model

The Association of Canadian Advertisers (ACA) is urging the CRTC to extend the new media exemption regime to allow time to test a new partnership that could dramatically boost the amount of video advertising on the Internet. Online video advertising in Canada represents less than 1% of all online advertising, generating about $9 million annually. But ACA executives told the new media hearing today that the National Commercial Agreement, inked in Dec. 2008, is expected to increase video ads online by drastically cutting down production costs. The deal, which was signed with the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), covers a slew of issues. It came into force early this year, but the ACA says a further period of regulatory exemption is necessary to encourage experimentation, creativity, and innovation. “A period of experimentation during these early days is vital to allow program and advertising content producers to work together,” said Bob Reaume, ACA VP, policy and research. Although online advertising has grown significantly in recent years, the growth has mostly been in the areas of search and display advertising, the digital equivalent of classified or print ads, said Reaume. Prohibitive production costs have discouraged Canadian advertisers from supporting video ads online. For instance, to produce a video ad for 10 websites in the U.S costs approximately $7,800 compared to $50,000 for the same number of sites in Canada. In an interview, Ronald Lund, ACA president and CEO, said under the new deal, production costs will drop to $7,800, making them equivalent to costs in the U.S. “Now new commercials on new media can be shot in two hours, three hours or four hours. Having halved the price without any prejudicial residual fees, this should really help in getting real live bodies in front of consumers instead of banner ads,” he said. If CRTC decides to impose special measures on new media, Reaume said it should consider tax incentives for the production of online video ads. “Currently, program producers can avail themselves of several tax breaks for the creation of content, but advertising content creation is shut out,” he said, emphasizing that although the CRTC does not deal with tax issues, an endorsement from the commission will not go “unnoticed.” Lund cautioned, however, that any fee on the Internet that becomes too onerous is likely to hamper the production of online video ads. In general, advertising in all its forms contributes substantially to the Canadian broadcasting system, generating $13.7 billion for the economy annually, according to figures from the ACA. CRTC commissioners were keen to know the amount of video ads online but the ACA said that information isn’t available. Commissioners also wanted to find out how online video ads could be measured. Reaume said the ACA and ACTRA are currently working on reliable modalities of tracking the amount of online video ads. Currently the industry uses two tracking methods, one that analyses server data and Comscore. But the server data method, which tracks users’ visits to websites, is subject to distortion and inaccuracies, especially when users delete cookies on their computers, Reaume said. Producing online video ads is expensive throughout Canada, with Quebec being the exception, mainly because advertisers can negotiate deals with individual producers operating outside the Union des artistes (UDA), which is the ACTRA equivalent in Quebec. Lund said the ACA is negotiating with the UDA, but no deal has been struck yet. “The deal with ACTRA might be a good model but we will see as we negotiate,” he said.

Advertisers want new media exemption extended to test new video ad model

News | 03/09/2009 6:10 pm EDT

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