Saturday, February 25, 2006

Verticals and Content

As a content producer, I've been getting more and more interested in "verticals" - sites that target a niche audience, as of late.

A few attributes that are attractive to me, as I work along side the rest of the content producers to find the best financial model:

1) Niche is easy to program. Not having to be all things to all people means you can be good things to your people.

2) Size - these sites are big enough to justify good original content, but not large enough to hire the cast and producers of "Lost" to make a television show for them. They're likely to be open to out-of-the-box ideas to create an authentic online video experience.

3) Business model - most verticals are in the traffic business. They sell ads (at a premium, because they deliver a targeted narrow audience) and they do that by creating and aggregating content that their niche wants to see. If my video can generate traffic for them, then I am benefiting their business, and we're good for each other. It's no more abstract than that.

4) Being in a niche, and being in the traffic business means that these sites have to know their niche very well, and have to treat their customers very well. Niche communities are fickle. If you aren't providing a good experience and good content, your community will quickly migrate to another site in your vertical, and you will be out of business. So direct increases in traffic aside, the verticals are motivated to provide my video content to their users from a traffic retention perspective. Along the same lines, competition within a vertical can be fierce, and anything they can provide that the other guys isn't can mean the difference between the hundred million dollar buyout and just fading away.

Judging from CNET's article today, Wall Street loves these guys too:

'There are more choices for consumers. You see what's happening in the broadcast area. TV is becoming more fragmented and I do believe that will happen on the Web with more niche type sites and community type sites,' said Patrick Vogt, chief executive officer of Viewpoint (Research), an Internet marketing technology firm.

Vogt argues that sites like CNET and iVillage, which have specific targeted audiences, also can charge more premium rates for ads since the advertiser knows exactly who they are reaching when they buy an ad on these types of sites.

'Niche sites are providing a richer experience so they can charge more. They have a relevant market for advertisers,' he said.

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