Monday, July 13, 2009

Making Money From Online Video

Making money from the delivery of online video is something of a Holy Grail to content owners. A number of different approaches have been taken, but little has succeeded to date. However, I believe that this is about to change.

There are a number of different models which are now working in the marketplace, but there remains one critical core factor, and that is the ability to deliver consistent, sizable audiences and to keep those audiences engaged (not that different from traditional telly, really).

Here are some of the models I’ve seen succeed:

Syndication – not providing services yourself, but simply charging for the use of the content; to do this you will need access to premium content and have the infrastructure to handle the legals and the logistics that come with this in the form of rights management and content versioning and distribution.

Sponsorship – more and more brands are realising that they need to associate themselves with content in order to attract the attention of potential customers; there is a ready-made market in matching brands with content, but there are many complications to this: you have to tackle in house departments and agencies, you have to know what the ‘profile’ of the brand is and what kind of content they want to be associated with, and then you need to build a suitable service. Pudding company Gu’s deal with We7.com is a good example using audio.

Traditional Ad Supported – there has been a problem with this model in the past insomuch that a single banner ad at £1 CPM is unlikely to cover the cost of streaming a modest video, let alone provide revenues to cover content production, technology and profit. However, some adjustments to a Player can quickly change this. For example, our own VidZapper application allows for two display ads (generally a banner and an MPU) plus other commercial opportunities (see below). The ads are rotated every thirty seconds (see an example at http://moviebeat.tv); this means that someone watching a six minute video will be exposed to 24 impressions. At this level the clickthru rates are acceptable to advertisers and the revenues are enough to pay for the video delivery and cover other costs.

Video Ad Supported – if you’re delivering a decent audience there are now increasing opportunities for video advertising. Companies like Web TV Enterprise are doing a sterling job in opening out this market by treating it like traditional TV and employing professional TV salespeople. One day, perhaps, there will be online equivalents where ads can be booked, but the media buying market is made up of humans at present and if you want to sell, you’ll need good salespeople and a decent content and audience proposition.

Ecommerce – the most ignored area of online TV is ecommerce; all the projects that I’ve been involved in using video to sell off the internet have been hugely successful. The scope for including advertorials, product placement and sponsor driven content are phenomenal and ripe to be tapped.

Other – there are a large number of automated and affiliate schemes that can drive smaller levels of revenues to your internet TV service; for example Google’s Adwords and Amazon’s Associates scheme whereby you can sell DVDs, books and other related content.

Eight years ago I was convinced that the market was ready for commercial online TV channels; I was somewhat premature. However, timing is everything in business and the environment for launching (or even re-launching) a successful internet TV service is now very different and far more conducive.

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