Click through rates continue to plummet, falling below 2 per thousand, according to European ad network ADTECH AG. That's down from .22 percent in December, according to MediaPost.

Click throughs are falling for two reasons -- ad saturation and consumers who are ingesting more video, so static ads are failing to catch their attention. Publishers looking for any means possible to increase revenue are overloading their sites with AdWords and banner ads in the hopes of drawing a few stray clicks to generate cash. But the more ads per page, the lower the yield per ad.

Also, with video becoming an increasingly important part of the web experience, text and static image ads aren't able to rise above the noise. The study showed that video ad click through rates are nearly 5 percent, a stark contrast to their inert cousins. As the web becomes more of a TV-like experience, shouldn't the ads emulate broadcast as well?

I nominate Apple's ubiquitous PC-comparison ads as the best of the banners. The quality of the TV spots are so good, you are tempted to click on the online ads just to see what they come up with next. Any other catch your fancy?

Cable operator Cox Communications and Disney have teamed up to eliminate the fast forward option on a new video on demand service. Select ABC programs will be available on demand the day after airing on broadcast TV, but consumers will have to watch the ads.

Video on demand services will likely expand to counter the flexibility of using DVRs to record and watch shows later. But forcing people to watch commercials in a traditional manner misses an opportunity to generate even more revenue through interactive customized ads.

This could be a groundbreaking opportunity for cable operators to better know their customers and engage in interactive marketing. Cable operators should develop interactive ads that run before the program based on demographic information.

Let's say you work on Thursday nights but don't want to miss Grey's Anatomy. The first time you want to watch the show through VOD, you are asked a few demographic questions, and interactive ads that match your tastes (clothes, cars, detergent etc.) are shown before the broadcast. Cable operators then get great data about the effectiveness of ads and can charge much higher rates than they can through the unfocused ads of broadcast TV. Consumers get to watch the show uninterrupted, so everyone is happy.

DVRs, which are now in 17 percent of households, are here to stay, and combating them with yesterday's tools is a losing battle.

Source: MediaPost.

The cable monopoly is dead. Long live cable!

One of the biggest shifts we'll see during the next five years in entertainment is an explosion in consumer choice in television/broadband entertainment that may be bigger than the arrival of cable services.

Between satellite, telecom and broadband entertainment companies, cable companies are in the crossfire of new services that will force them to lower prices and become more flexible in meeting peoples needs.

Comcast, Cox et al are being challenged by telecoms such as AT&T's U-verse that similarly will bundle TV, Internet and phone services. On the broadband side, startups such as Joost will deliver a broader variety of high quality video.

This will result in the unbundling of cable packages so that you won't have to pay $40 a month for the 100 channels that cable companies select. Consumers will be able to go ala carte in paying for only the channels they want. We'll also see much more variety in video-on-demand programming, as companies compete with the online counterparts of ABC, NBC, etc. by letting you watch show on your schedule. We'll also see a surge in vertical programming online and through TV as both sides look to satisfy the "long tail" of consumer demand.

Don't expect cable companies to disappear; just their power will be considerably diminished. ABC wasn't killed by HBO, it just lost a great deal of its captive audience. The consolidation of services should be seen as a good thing because it results in increased efficiency and hopefully more attractive pricing.

Forget Microhoo, it's time for Ciscoo!

There were rampant rumors last week about Microsoft wanting to buy Yahoo, but I'm skeptical that that will happen because there is too much overlap, and Yahoo is too strong to let itself be weakened (yes, weakened) by Microsoft.

While Yahoo's profits are down the company still is a much stronger brand and has a more forward thinking vision for digital media than Microsoft. Cisco, which is moving from networking hardware into Internet services and software, is a much better fit.

Cisco has been in acquisition mode, with WebEx and Five Across among their recent purchases. Today Cisco announced a new streaming video service for media companies, which is among the places that Yahoo wants to be a leader.

It's a marriage made in heaven -- the companies are Silicon Valley neighbors that complement each other and have very little overlap. Cisco's IP networking expertise combined with Yahoo's reach and content and social networking services would open Cisco up to a world of new customers.

So perhaps the Microhoo rumors were intentional to let Cisco know that Yahoo could be had and generate some interest in the company. Cisco is 4 times the size of Yahoo, so they have the money to make it work. Together they could be a nice balance to the Google juggernaut.

Pando CEO Robert Levitan says video and other content owners who distribute large files can cut their costs to next to nothing by using peer to peer software.

Pando, which has 6.5 million users and is adding 40,000 per day, is free client software that stores parts of files on PCs and manages the data flow so that files can be moved quickly and cheaply. The software enables individuals to send files up to 1 gigabyte through plug-ins for IM and email clients that can get around file size limitations.
Very handy for many users, and you can't beat free.

Video producers can cut the cost of distributing via RSS feeds as after a critical mass of recipients have received the files, their PCs (and broadband connections) assist in sending out the files to subsequent people who download. Premium users of Pando can send files of up to 5 gigabytes, so feature length films are no problem.

Pando would be a good fit for companies such as Movielink or Amazon that are selling movie downloads. Also, cable companies or DVR manufacturers such as TiVo could benefit by breaking up movies into chunks and having users assist in distribution. Levitan told me Pando is currently exploring relationships with companies in those businesses.

Media companies will eventually come around to trusting peer to peer, and Joost is opening doors with its streaming P2P service. By braking files into pieces, P2P can be more secure than making entire files available.