An IAB/PwC study states that the annual value of the internet video market in the UK was £9m, but studies in the US claim that the only video advertising market there will be worth £500m in 2009 (but it was published in a vested interest report by LiveRail).
Whichever figure you believe ( my personal estimate is that the UK market will be worth around £20m in 2009, depending on Kangaroo), and the US market probably is ahead of the loop thanks to better availability of premium content such as first run series and live sports events at around £150m.
The lesson all round seems to be 'it ain't what you do but the way that you do it'. I've had discussions with parties ranging from Reuters to Hulu in the US who have more ad inventory than audiences. YouTube, on the other hand, is monetizing under 3% of its video. So, behaving like television and selling the content as TV advertising seems to be the trick.
In the UK there are specific problems:
- agencies expect large inventories: niche channels deliver niche audiences, which isn't the way the industry thinks or buys
- metrics are still primitive, and it's impossible to compare traditional TV and internet TV in an equivalent way (one uses TVRs and the other CPMs, for example)
- there are vested interests in the broadcast model
- creative hasn't been cleared
- internet TV advertising doesn't belong anywhere in a agency - is it in the TVP division, or the online division ?
- the logistics of the production are disproportionate to the booking value of a campaign
So, what can be done ?
Well, there's a dire need for an automated marketplace which can automate the matching of inventory with advertisers, especially to take care of the long tail.
There's also the need for channels to sell into vertical markets.
Contrary to current reports, which seem to indicate that Kangaroo will have to water down its offering, it may well be what the UK market needs, although the danger might be in such a small market that all the budgets go to the service since it's an easy cross-service buy.
More than anything is the need for experimentation with shorter and longer forms of advertising. Plenty of precedents can be seen on the bookshelves of newsagents. Magazines have traditional been as much about the ads you can read as the articles that are wedged between them.
Take a magazine mentality in a television world and you probably have an answer to this problem.