Premium Content, Social Networks Driving Surge in Web Video
Though ad revenue is emerging as a dominant business model for Web video, the New York Times reports that marketers are still wary of online buys, and cites major advertisers such as Procter & Gamble spending only about 1% of their ad budget on the Internet last year. Such spending patterns are expected to change quickly, with online video ads projected to generate $4.3 billion a year by 2011 (10% of overall Web advertising), up from $410 million (2.4%) in 2006.
The shift in ad spending is largely benefiting online video services offering premium content, which advertisers are more accustomed to spending on than the user-generated content that put the You in YouTube. A new study found that web viewers are most interested in news clips, followed by movie trailers, comedy sketches, music videos, and TV shows. User-contributed video clips placed 9th out of 11 possible viewing categories.
Sony’s Crackle video service recently announced major ad deals with Pepsi, Honda, Epson, Sony Electronics, and Vodafone. The sponsor packages will feature advertising on Crackle.com and on video content Crackle syndicates in branded customizable video players to Bebo, AOL, hi5, Piczo, WordPress and other outlets. Pepsi is sponsoring Crackle’s Minisode Network channel, while Honda is underwriting the Shorts Channel and Sony Electronics will advertise its ‘HDNA’ high-definition TV campaign on Crackle HD content.
ManiaTV recently canceled its 3,000 user-generated channels when they failed to draw enough viewers (and ad dollars). 80% of Mania’s viewers were watching professionally-produced content.
Revver says it commands video ad rates ranging from $3 to $35 CPM (of which Revver returns 50% to content creators). Online video ad network YuMe Networks reports video ad rates ranging from $1 to $80 CPM, and that women viewers aged 18-34, receive higher fees then men in the same age group.
Though web video ad formats are often more effective than banners ads — with click-through rates averaging up to 5% on video overlay ads, compared to 1% average click-throughs on banners — web viewers can be less tolerant of video ad units than they are of traditional banners. A new study reports that 31% of US web viewers take a strongly negative view of video ads versus 18% with a strongly negative view of banner ads. The data challenges advertisers to adopt formats that are complementary and not disruptive to the viewer’s experience. The study found that 70% of web viewers would prefer to see a pre-roll video ad than watch a long ad in the middle of a news clip, and that viewers are willing to watch a longer pre-roll video ad before a long-form video clip (e.g., such as TV episode).
AOL recently revealed a new online video format called “video ticker ads” in a partnership with online video advertising technology firm PointRoll. The ticker ad appears at the bottom of the video player 10 seconds into a video stream and either pauses the video and expands the ad when a user clicks on the ticker, or disappears after 15 seconds if the viewer does not respond. The new format is seen as an effective alternative to pre-roll ads for online video, and will appear across AOL’s premium video content.
Shortly after Facebook partnered with Microsoft and unveiled a controversial social ad network placing offline consumer shopping transactions on public profile pages, Google announced its open source social-networking platform. Google plans to allow any social website to integrate with OpenSocial APIs and host 3rd party social applications. OpenSocial partners include Engage.com, Friendster, hi5, Hyves, imeem, LinkedIn, MySpace, Ning, Oracle, orkut, Plaxo, Salesforce.com, Six Apart, Tianji, Viadeo, and XING. OpenSocial is expected to give advertisers considerable reach by distributing viral, interactive widgets across multiple social-networking platforms.
Social network Bebo launched its Open Media platform in partnership with media companies including CBS, MTV Networks, TBS, ESPN, the BBC, Yahoo, Sony’s Crackle, Next New Networks, and JibJab. Open Media allows Bebo’s content partners to distribute video programming to Bebo’s Bebo’s 40 million users without requiring a fee or revenue split. Content providers can customize pages and stream video through their own media players and with their own advertising. Bebo alerts a user’s friends when a player is added to a user’s page. Bebo recently launched an interactive drama “KateModern,” and next year will premiere the drama “Sofia’s Diary” and reality series “The Gap Year” in a partnership with Endemol.
The social video web is emerging as source of new material for traditional TV networks, particularly as the writers’ strike begins to dry up traditional programming options. The Writers Guild of America determined that indy Web projects are not subject to the strike. NBC has announced it will bring the ‘Quarterlife’ Web series to its TV network. “Quarterlife” was developed for MySpace and other social networks on the Web by TV veterans Marshall Herskovitz and Ed Zwick. Ironically, with NBC now a partner in “Quarterlife,” an order for more episodes could cross the picket the line, since the deal gives NBC rights to air the show on domestic TV, and on DVD and the Web internationally.
Technorati Tags: AOL, Bebo, Crackle, Facebook, Google, Honda, ManiaTV, Minisode Network, NBC, Open Media, OpenSocial, Pepsi, PointRoll, Procter & Gamble, Quarterlife, Revver, Sony Pictures, YuMe Networks
