Video is the New Black

Posted on February 22, 2008 by Tony Uphoff

Kudos to Linda McCutcheon: SVP of New Media at Nielsen Media for the line. Linda was a panelist for two of our sessions at the Executive Management work sessions at the Folio Summit last week, where online video was a very hot topic.

Video is indeed one of the hottest topics amongst online media companies today. Should you be investing? Experimenting? What's the right formula, short clips, long form, user driven, original programming? What's the right business model? What are the implications for content teams? Should you just give cameras to editors? What's the right advertising model? What's the right sales model?

When in doubt, always follow the audience. Research firm eMarketer projects that by 2011 more than 85% of the U.S. Internet population will consume Internet video, up from roughly 63% in 2006. The last time this kind of viewership growth occurred in a new medium was when the television was first introduced in the early 1950s.

There are several special interest sites that are driving significant audience and advertising revenue growth by producing original video programming and by showcasing quality user video. Two good examples are Freeskier Magazine and Surfline.com. The metrics these sites are generating in number of streams viewed, time on site and user engagement are eye popping. In addition the CEO's of both companies, Bradford Fayfield of Freeskier parent company Storm Mountain Publishing and Jonno Welles of Surfline, have told me that advertisers are rapidly buying up their video related inventory.

We have been producing a considerable amount of video via Light Reading TVand our video programming on The TechWeb Online Network. We are seeing significant traffic, with stream downloads in the hundreds of thousands as well as deep audience engagement. Our advertising demand is pacing with the audience growth as well.

Ok so obvious huh? Online video is the future, we should all be investing and will all make money. Right? Well as usual...it's a bit more complicated.

Video without question is and will be a major application on the web. Audiences are adopting online video in a wide range of formats. Short clips, long form, high quality, low quality "shakey cam", user driven and more. The advertising and revenue side is lagging however. There are a couple of reasons for this. First is the lack of a standard ad format. Most marketers don't have pre roll or video advertising appropriate for the web. As a result most online video advertising is from the same large scale advertisers, who do have pre roll, in each market.

The other challenge is the lack of a common currency to price and value online video advertising. Do you price value by the number of streams viewed? By a sponsorship model that values the brand and demographics of a site, as opposed to some sort of traffic metrics? Or performance metrics that demonstrate a specific level of audience engagement?

The reality is that money and the standard currency to price appropriately will rapdily follow the audience in online video. As noted in previous posts, my theory on Google's buying YouTube is based on Google developing ad sense for video. In other words contextual ad serving of a standard ad unit (not only video ads) against video searched and viewed. There are other companies like BrightCove,already offering video publishing and ad serving systems for online sites.

Video is rapidly becoming a standard online and will only get larger. Video is the new black. It needs to become a staple in the wardrobe of any serious online media brand.,

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