Sunday, January 07, 2007

Where is the low hanging fruit?

I've been hearing a lot lately about advertisers chomping at the bit to buy ads against video content. The "low hanging fruit" of internet advertising as we move into 2007.

Granted, the overall market for video ads increased 82% this year to over 400 million dollars. But I fail to see how this is low hanging fruit for content producers.

Sure, right now it's pretty easy to sell ads against video content at around a $40 CPM. That's what the video sites like Revver or BlipTV are getting from their advertisers, and that's what you're getting from the large ad networks. Unless you're going to seek custom advertisers on your own (which is expensive) then you're pretty much stuck at that level.

Is there a lot of demand for that advertising space? Probably so. Because that CPM is incredibly low for video. Video is wayyy more expensive to produce than text content, yet the CPM isn't much different.

And it's not just us independents stuck in this position. I can't seem to find a link anywhere to back me up, but I remember clearly when ABC announced that they would be streaming their primetime shows, they also announced that the advertisers were forking over 500k for a fiscal quarter of advertising. That's a lot of advertising - a half a TV season. And if you've watched ABC's streams, the ads are incredibly prominent. That may sound like a lot of dough, but compared to television advertising, it's peanuts. We're talking about shows that cost 2 million an episode to make.

To build a large audience for web video is exponentially harder than driving traffic to a site, and for the advertiser the brand exposure in video is pretty rich - even richer with brand integration/sponsorship models.

So what we have now is basically low hanging fruit for the advertiser and unsustainable returns for the content creator or video network. To make that equation more favorable to the content producer, we need to get better with metrics and we need more ROI success stories.


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