Is There Money In Online Video?

June 14th, 2008 · No Comments

In February 2008, Internet users viewed 10 billion videos, a 66 percent increase over February 2007, according to comScore. Online video ads are expected to pull in $1.3 billion nationally this year, according to eMarketer.

The race is on to make money from hosting video on the net - if companies can’t make a profit storing and serving up vast quantities of video, we can say goodbye to free hosting. Heavy, Joost, and YouTube all have different approaches.

Joost CEO Mike Volpi found that there is a strong click-through on ads if there are regular ads around the 30-second video ad spot. The ad rates are much higher than TV (Joost’s CPM, or cost per thousand, ranges from $40 to $60 vs. TV’s $20 to $30). A 1% click-through rate is often seen as fantastic in the media business, and Volpi said he’s getting north of 2%, sometimes up to 6%.

YouTube found extremely high abandonment rates with pre-roll video (essentially, a video- or TV-like commercial that plays before the video content runs). For the Lower Third ad, or ‘in-video ad,’ you can click through to the offer without leaving the player, Zamost said; from a viewer standpoint, it doesn’t intrude heavily on the content. Actually, it covers only 20% of the screen.

Heavy.com is capitalizing on the race to monetize online video by spinning off its advertising platform, Husky Media. Husky sells advertising “skins” that frame each video, providing a solution that neither interrupts nor delays the content. “Other sites have come to us and said, ‘You guys do a great job selling premium advertising around video. We have lots of video we can’t sell advertising around. Can you help us?’” As we developed the business we realized the real business opportunity was not just monetizing other people’s video but giving audiences on other sites a chance to watch content they might not have access to.

YouTube And Joost Show There’s Money In Online Video — Video Advertising — InformationWeek