VideoEgg

[ 2008.05.26 | News Article ]

The sheer size of the Web video market suggests that there is a lot of upside to finding ways to inject messaging into this medium.

Open up, here comes a much-needed serving of broccoli after the banana-split eating contest that has been the early days of video on the Web.

Streaming Media East convened last week in New York, and there was a healthy dose of best business practices prescribed for both new and old media’s use of online video. Indeed, monetization was probably one of the show’s central themes. Sure, this is all cool and super fun, but let’s pay some bills while we’re at it.

It seems sage since the sheer size of the market—10 billion streams per month and $1 billion in Web video ad revenue forecast to grow to an estimated $12 billion in 2012—suggests that there is a lot of upside to finding breakout ways to inject messaging into this medium. Making money against that burgeoning market seems to rest in two areas: the receptiveness to messaging and the acquisition, measurement and monetization of meaningful audiences in terms of both qualification and reach.

A report conducted last June by the Online Publishers Association shows that, so far, people seem pretty opened to messaging in Web video, at least if it’s not too intrusive or totally out of left field. Of the respondents, 80 percent had seen advertising in online video, with 52 percent taking some sort of action, ranging from seeking more information to actually making a purchase. In a 2007 study, Doubleclick found that the clickthrough rates on video ads were markedly higher for static image spots. Sound and motion online seem to draw a deeper connection and engagement with users/viewers.

The OPA study also found that the majority of users prefer the ad to be related to the content it’s placed in; just over half would prefer the ads over having to pay for the content. The majority said the likability of a video ad depended on its length as opposed to its type or placement.

Building audience scale is certainly a big focus of companies ranging from CBS to Next New Networks, which wants its video content to live well beyond the confines of individual Web pages. Those syndication efforts are creating bigger audiences that command increasingly attractive CPM rates. “We embrace what is called super distribution,” said Herb Scannell, CEO and co-founder of Next New Networks, during Streaming East. “We want to be wherever the viewers are.”

Interestingly, the social networks and media that spring up around or parallel these viral videos function as sort of little research labs for niche, and sometimes extremely desirable demos—young males, IT execs, etc.

Taking it a step further, to Alex Blum—CEO of social and rich media developer KickApps, who calls this symbiosis between social media and Web video “viral syndication”—widgets are evolving into a key driver of discovery for users who help proliferate video widgets via personal Facebook/MySpace pages.

“The power of this is that you establish collaborative effort with your audience,” said Blum who sees the portable and “be fruitful and multiply” nature of widgets as almost as effective as search engine optimization in focusing attention of Web video product.

Still, Jim Louderback, CEO of Revision3, which bills itself as a TV network for the Web, said that SEO drives something like 70 percent of all discovery of Web video and that it will remain a key traffic driver. While search keys on text now, cracking the algorithm for video-based search is seen as the outside edge of the digital media envelope.

VideoEgg CEO and co-founder Matt Sanchez has led the commercialization of the overlay concept of video advertising and is now rolling out the next generation of video messaging in a product called Ad Frame. To Sanchez, the challenge going forward in a world where users are in control, disruptive media is flawed and fragmentation is rife—look at any 17-year-old’s MySpace page and there are probably dozens of video links—is creating accountable rich media for advertisers.

That accountability, said Sanchez, means that buying page views on a cost-per-thousand basis needs to be replaced by a cost-per-engagement metric that kicks in only when a video is clicked on or rolled over.

“The page view doesn’t make sense anymore because they don’t have a consistent value, where cost per engagement is a clear signal from the users that they’re interested,” said Sanchez.

While Web video alone represents a small percentage of total time spent with media (TV is 47 percent), online media in the aggregate, including video and social media, accounts for 17 percent of that time-spent measure, certainly enough scale for marketers to work with. “We still have a way to go to get ad tech integrated and building to scale so it’s something meaningful for marketers,” said Sanchez “But we’ve made some exciting progress, and we’ll continue to focus on product, price and scale.”

Indeed, much like the very early days of cable, Web video has a lot of ground to cover before it is seen as a mainstream messaging platform. “This is another level of buying that we have to get our head around,” said Scannell, the former president of Nickelodeon.

But with syndication efforts, the growth of social media and more sophisticated metrics, the vegetables course will be devoured and the dessert chart will begin to roll.

“We’re starting to see checks with zeros on them,” said Scannell.

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By Jim Cooper

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