The mysterious online world

Can anybody figure out why CW's "Gossip Girl" has only so-so Nielsen ratings but is routinely the most downloaded show on iTunes? Or why the apocalyptic drama "Jericho" was cancelled by CBS and then brought back after the show's online fans went nuts? Josh James is CEO of a Web-analytics firm called Omniture, and he tells Ad Age's MediaWorks that online preferences aren't always so mysterious. I'm always a little suspicious of these consultant types who claim to have the answers to things that are probably unanswerable, such as the future of online content. But with the writers and media companies at loggerheads, we can use all the disinterested information we can get. Here are some snippets:

MediaWorks: "Jericho" and "Gossip Girl" are two of the strongest examples of shows that have become hits by different standards than traditional, live, prime-time ratings. How can changes in media measurement change the industry's perception of what makes a hit?

Mr. James: One of the big challenges is understanding the revenue-generation potential for commercials online. When you're streaming it and you show some commercials in the middle, some at the end, how many people are actually viewing that? Is it just playing on a screen or is someone actually watching it? There's a huge need for publishers of this content to actually understand what's going on, and that's where we come in. How many stops and starts? How many people skip over commercials? How many customers have set-top boxes now with on-demand commercials?

MediaWorks: How have some of these new viewing patterns affected revenue?

Mr. James: One of the big things we've always measured with these programs is the lifetime ability for shows to generate revenue. You've got to make that prediction very soon into the process -- whether or not a show's going to make money. We started to notice not only with DVDs, which actually started this off, but also all the online sales taking place and the digital downloads taking place -- just understanding the true revenue-generation capability of these different properties. Some shows wouldn't get a huge following in their first season and might not in their second season, but they end up making tons of money on DVD and see an increase in revenue when they're digitized and stuck online. You have to make sure not to cut the winners too soon and make sure you truly understand what a show's following is.

MediaWorks: What's the online-spending outlook for 2008? Will we start to see some of the big consumer-goods budgets move there soon?

Mr. James: I just met with a CMO who manages a $3 billion [consumer-products] spend, and he said by 2009, his goal is to have 100% of his spending online. Just last year it was less than 10%.