Posts for 'Rhythm New Media'

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Mobile video advertising is showing strength, benefiting from consumer adoption of the "mobile Internet," strong growth in video-capable smartphones and improving availability of high-quality content for mobile devices.

I gained further insight on the mobile video ad opportunity in a conversation yesterday with Ujjal Kohli, the CEO of Rhythm New Media, a firm focused on mobilizing and monetizing TV programming that has raised $27 million to date from a group of blue-chip of investors. Later this week Rhythm will formally unveil "RAMP," the Rhythm Advertising Media Platform, a mobile video ad network targeted to brands already advertising on TV who now also want to have a mobile presence.

Ujjal makes a strong case that mobile video is an ideal environment for brand building, and that it addresses many of the challenges that TV advertising itself is facing (clutter, distraction, fragmentation, inadequate frequency/targeting/measurability). Ujjal believes that the nature of mobile video consumption, with its relatively short duration, focused user sessions gives brands a renewed opportunity to engage their target audiences with hard-to-skip messages, not only in the prime-time window, but throughout the day as well.

Rhythm has been helping stoke the market for high-quality mobile video content by building video apps for clients like Discovery, E! Entertainment, TMZ, TV.com, Family Guy and others. App building has been a means to an end for the Rhythm, which is primarily focused developing its mobile video ad network. In Q4 the company has sold and run 20+ campaigns, for brands like MasterCard, Nikon, Toyota, Marriott, Anheuser-Busch and others. These are almost always 15 second spots repurposed from TV campaigns which is no surprise, as the mobile market is not yet big enough to warrant custom creative.

Ujjal explained that a key Rhythm differentiator is that its ads allow interactivity, or the ability for the user to click on an ad's call to action, as is common online. Rhythm has devised a way to incorporate interactivity in ads shown against videos viewed on iPhones, where the use of QuickTime doesn't enable linking. Ujjal said that click-through rates for its "interactive pre-roll" unit fall in the 2%-6% range, while a "full page" ad unit used for mobile photo viewing, (e.g. slide shows on TMZ.com) generate click-throughs up to 11%. Ujjal would not specify what volume of ads Rhythm is serving, except to say it's in the millions/month and that the CPMs are higher than in online video or TV itself.

I've been very bullish on mobile video for some time now, as I believe it is following a similar growth pattern as online video. The macro-trends supporting mobile video's growth are impressive: Nielsen believes that in Q4 '09, 40% of all phones sold will be smartphones and that by 2011 they'll be majority. By then Nielsen forecasts 90 million a month will be watching mobile video. According to its Q3 '09 A2/M2 report, almost 16 million are now watching mobile video/month, up 53% since Q3 '08. They are watching an average of 3 hours, 15 minutes/month. While this is inexplicably down a bit from a year ago, it's worth noting that the heaviest users, to nobody's surprise are age 12-17 (7 hours, 13 minutes) and 18-24 (4 hours, 20 minutes). As these segments age they'll no doubt carry along their mobile video expectations.

Another dynamic sure to have a positive impact on mobile video consumption is the intensifying competitive battle between carriers and between smartphone manufacturers themselves. The recent AT&T-Verizon ad war about their 3G availability is a glimpse of how these companies will use network capacity (key to a positive video experience) as a competitive lever. On the handset side, there is hyper activity: Motorola's Droid is off to a respectable start, a bevy of Google's Android-based smartphones are due in 2010, and, complicating things further, Google plans to release its own "unlocked" (i.e. carrier neutral) Nexus One smartphone next year. While the iPhone opened the smartphone floodgates, many others are now rushing to get a piece of the action.

The biggest uncertainty impacting mobile video's growth is the wireless networks' ability to keep up . All the snazzy smartphones in the world won't matter if users can't get 3G or better access to watch quality video. But, if broadband is any guide, wireless carriers will build out capacity to meet demand, driving up data plan subscriptions and their own ARPU. Broadband also illustrates that as the necessary building blocks fall into place, content providers will be motivated to take part, providing consumers with ever more choices. While it's still early days, taken together it looks as if big things lie ahead for mobile video and for those like Rhythm who can help monetize it.

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