News Corp.: Video ads to get premium pricing

July 23, 2008, 12:33 AM UTC
News Corp. President Peter Chernin says online video is a premium money-making opportunity. Image: News Corp.

By Jon Fortt

HALF MOON BAY, Calif. – Looking at big money-making opportunities online, News Corp. President Peter Chernin pointed to video, mobile and overseas markets as good long-term bets.

In an interview with Fortune editor at large Richard Siklos at Brainstorm Tech on Tuesday, Chernin said advertisers still haven’t completely embraced the online opportunity, and that they continue to have a television mindset. He said an advertiser recently told a MySpace sales rep to come back when the social network has a “SuperBowl-level” event. What the advertiser failed to recognize, Chernin said, is that the MySpace homepage has as many viewers every day as the SuperBowl has once a year. (Of course, there’s a good argument that MySpace visitors aren’t quite as engaged with the content as SuperBowl viewers are.)

He also addressed the challenges News Corp. faces in getting a decent price for ads on MySpace. (The company partners with Google to monetize the site.) The answer, Chernin said, may be to look beyond banners and text ads. “What drives ad prices is scarcity,” he said. “The place that is most promising is probably in video. By definition there’s more scarcity in video, and there’s even more scarcity in premium video.”

Mobile is attractive because of its scale. It “is by far the most penetrated device on earth,” he said. “So it’s this enormous distribution platform, but by definition you’re not going to be watching two-hour movies. It’s going to be interesting to see people develop uniquely mobile content.” It will take the medium a long time to develop, he said and predicted that in two years, the industry will still be trying to figure mobile out.

Geographically, Chernin said he expects emerging overseas markets to show faster revenue growth for News Corp. than the U.S. and more developed markets. “We’ve invested in cable channels in all sort of Podunk places.”