Thursday, April 17, 2008

Show Me The Money

Monetising internet TV services is often more difficult than it seems. There are a number of issues that a nascent broadcaster must deal with:

Volume – it’s a chicken and egg problem – you need a large audience before you can attract advertising, but building an audience costs a lot of money; presume that you’re going to have to spend a lot of money on building your viewer base. Many ad agencies are not interested in volumes under a million unique users a month; if your site is not going to hit such figures, then you may be best off joining an ad network which aggregates audiences.

Finding advertisers – is far more difficult than it sounds; even if you do build your own ad sales team you’ll find that they have a hard time getting through to the buying personnel at media buying agencies – where the major budgets reside.

Inventory – you need to be able to project inventory, since all media buying is done based on the future; this largely has to be based on past audiences and, if your viewership is growing quickly, can be difficult to fill since you’ll be underestimating. Equally, over-estimating can be a problem as real world broadcasters have recently shown in revenue warnings.

Revenues – the ‘going rate’ for an average internet TV service is $30 – 60. However, niche audiences should be worth a lot more than this. The ad industry has yet to wake up to the potential of the online world where audiences can be precisely targeted and monetised (i.e. Google’s business model) and are likely to only get this when there are automatic exchanges such as Google Adwords for video advertising that enable this.

Technical – you’ll have to make sure that ads match your delivery. Very few of the advertising systems provide full support for in-stream Windows Media advertising, for example. Ad platforms have been very slow to catch up with new, evolving formats.

The easiest way to sell out your ad inventory is through one of the many video advertising platforms available, but, be warned, you’ll need to be sizable before you really get their attention.

More on these networks to come in the second part of this posting…

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