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Convergence culture: Advertising is moving from general audiences to niche markets on internet TV, writes Haydn Shaughnessy

One of the surprising characteristics of the internet is that change often takes much more time than is suggested by its happening-now reputation. Two pieces of recent news point to accelerating changes in the television and advertising world.

The internet promised a revolution in advertising 10 years ago, and is only just beginning to deliver. The revolution will be built not simply on the shoulders of cheap distribution but, more importantly, on targeted advertising. Advertisers know the bulk of their budgets are wasted when they pay millions to TV companies to show ads to people who have no interest in their products. Being able to deliver only to the people who are interested is advertising nirvana.

The other development, though, that will speed up change in the advertising and television industries is the BBC's decision to launch a service allowing web users to download TV programmes to their computers. The American internet TV service, Akimbo, which runs 123 TV subscription channels, found very early on that its most consistently popular programme was Fawlty Towers, and it now offers a range of BBC programmes to an American audience.

New medium, old programmes.

The new challenger for a global TV audience, Joost, has adopted a similar strategy hooking up with quality American programme providers Viacom and National Geographic, and Dutch reality TV maker Endemol. Joost has also signed a deal to provide experimental advertising campaign space for brands such as Microsoft, Intel, Motorola, Sony Electronics, Taco Bell, Unilever's Magnum Ice Cream, the US Army, Lionsgate, Opel and Vauxhall, Hewlett-Packard, Coca-Cola, Procter & Gamble and Nike.

Joost has reached those brands through agency Interpublic, which will have a research role in the project, testing and recording Joost's addressable advertising potential. Global agencies MAGNA Global, McCann Erickson, Momentum, MRM Worldwide, Octagon, Universal McCann and Weber Shandwick are part of the deal, and advertisers, according to media analysts Media Post, are rumoured to be spending $50,000 (€36,770) each for the three-month trials.

As established global players such as the BBC and Viacom open their back catalogues to an internet audience, they look likely to capture viewers and advertisers, though success depends on Joost providing excellent viewer profiling and ultimately proving that through their service, viewers actually become customers by making purchases. It is tempting to surmise that old-fashioned programmes, rather than any significant content innovation, are finally moving advertising and television into the digital future.

Another conclusion would be that national television services such as RTÉ face a challenge they thought might be some years in the distance. Joost and Akimbo effectively offer programmes on demand, are in the process of capturing the catalogues that matter, and can deliver to an Irish audience as easily as to an American or African one. The idea that RTÉ can prosper by focusing content on Irish themes might still be viable, but presumably only if it can deliver Irish interest to a global audience.

If advertisers such as Nike, Hewlett-Packard, and Coca-Cola find internet TV an effective advertising medium, it doesn't mean they will stop making use of the conventional TV set. What it does mean is they will be willing to pay a lot less for it, and a lot less to the creative agencies that produce big-budget ads. Their need will be for a far wider variety of advertising collateral - 30-second TV ads, true, but also two-minute movies, documentary content that they can provide for free, and viral videos they can encourage viewers to give away. Ad agencies and services such as RTÉ might find themselves cash-strapped some time soon.

The avenues through which advertisers reach viewers is transforming as well as diversifying. MTV is rumoured to be planning 300 new channels and thousands of new websites in an effort to recapture the youth market.

Scripps, an American newspaper publisher with some audio-visual interests, is currently planning to launch 30 new TV channels in seriously niche markets, building on its success in building broadcast brands covering the details of modern lifestyles such as kitchen design. Those channels will provide viewers with more interactive elements. Scripps's kitchen-planning service in turn opens up opportunities for advertisers to interact with viewers at the point where they are conceptualising the next phase of their lifestyle investments.

These niche content products make targeted advertising relatively straightforward but demand of advertisers that they create their own content in ways that are relevant to a much wider range of viewer occasions. It remains to be seen how a service such as Joost will create profiles of viewers that have more meaning and relevance than those Scripps is aiming for, but what you wouldn't bet against is that they will create more meaningful context than a traditional broadcaster is generally able to do.

WORDS IN YOUR EAR

Targeted advertising- adverts that reach only the people at whom an advertiser aims

Addressable advertising -similar to targeted advertising

Niche programming- content available to cater for precise viewer interests, including a TV channel devoted to bathroom design