Web video monetization still unmastered

Fast Company’s article, “Who will be the Godfather of Web Video” got me thinking about some of the theories behind the monetization of video. A friend of mine insists that despite the evolution of social media, the consumer online behaviour hasn’t changed. It’s emotive, he says, and that has been and will continue to be the way online consumers respond to online advertising. Does that mean we negate the idea of predictability? If so then what is the use of applying retention initiatives? Does that mean that brands have greater pressure to create advocacy in this daunting arena? I’m not convinced of this theory because it assumes that the medium has no bearing on behaviour.

I believe the advent of social media has challenged advertisers to grapple with the issue of not only converting consumers, but also identifying with their needs in an environment that has been programmed to flee the almighty establishment. This rebellious medium understands that the sought-after millenials are not so quick to point-and-click.  I’ve yet to find stats to validate this but at a recent conference I’ve attended for Understanding Youth, it was made abundantly clear when one of the young panel members said to a room full of marketers and advertisers, “We know when you’re trying to sell us something. We know all your tricks and we’re not gonna give in. We’ll just run somewhere else.”

Today’s youth understand the social web and it is a part of their being.  Today’s social media is akin to the freedom revolution of the ’70’s — a way for people create an identity for themselves and carve out a path of existence online. The above notation clearly spells out the need to evolve advertising as the medium and audience evolve.

Web video is still a strong growth channel. According to the article, “it has grown in terms of content production, viewership, however significant revenue and especially profitability — even for YouTub with its massive audience of 69 million viewers — has been largely elusive. Advertisers still haven’t bought into web video advertising mainly because of the vast user-generated content that’s largely uncontrolled.  But the premium content sites don’t seem to be faring any better. Super Deluxe’s shaft by Time Warner, NBC Universal’s DotComedy’s short online stint and Sony’s money-losing investment into the once-promising Crackle — are all examples of this quest for a solution.

Some sites that are doing really well: Tetes a claque, CollegeHumor –> have some things in common: video that’s spreadable; audiences that are sticky. Most importantly — Consistency. Time will tell whether these sites will pave the way and lead others including Google/Youtube through the black hole.

Who says you can’t monetize social networks

You kinda wonder why social networks came to exist in the first place. These were havens/escapes for users who were tired of being bombarded by advertisers who held them handcuffed to the content in exchange for viewing their beacons of intrusive ads and even occasionally clicking on them (please oh please!) to get them to come to their site. Does anybody remember when the internet first emerged and advertising was a no-no. Eventually as with everything else, advertisers went where the masses were congregating and advertising became a necessary evil in order for users to access to the much-needed content.

Now social networks is the new norm, yet another opportunity for marketers –> but somehow the rules have changed. In this space, it’s about influence. it’s not about banner clicks. Playing in this space as an advertiser means you have to tread cautiously. I’ve talked about the “establishment” in previous posts and it’s clearly about learning to adjust in an arena that is dictated by its inhabitants. Big brands can damage their reputations if they fail to be authentic or try to sell themselves in a space where selling is not allowed. It’s also about attempting to and genuinely wanting to create relationships with the users in this space and willing to be open to discussion and criticism in order to grow the brand.

It’ll be interesting to see how the MySpace Plus 3 Major Music lables deal pans out. It almost defeats the purpose for the existence of social networks. And yet it is providing an avenue for labels to make money at a time where CD sales are declining , illegal downloading and file sharing is rampant and the music business is desparately finding ways to stay afloat. On the flip side, the advantage for many of the independent artists who currently have MySpace pages is enormous if they could benefit as well.

But again, will the million of users on MySpace perceive this as yet another imposition by big brands trying to infringe on their time? These users need to be the forefront of this. Strength in numbers dictate that users can change the way they are being marketed to ie creating demand for products they care about as opposed to having that demand pushed on them by advertisers.

The emergence of this new medium….

I’ve responded to a number of blog posts “Overlay.tv Adds Links and Easter Eggs to Music Videos” and “Hypervideo: Hyperlinking video content” and there is a lot of positive stuff being written about companies such as ours. Interactive video is here but it’s taking some time to sink into mainstream.  It’s ironic:  iTV has been talked about for years –> it was supposed to have emerged by now….yet online video is still a medium we haven’t figured out.  We’re still too far off that iTV phenomenon given that the online video market is still in a state of fragmentation and testing. Everyone’s still trying to figure out the monetization angle. There are still no standard CPMs for video advertising. Formats are continuously morphing in response to the user and advertising views on mitigating annoyance and increasing performance.  The video player is non-standard and the recent partnerships like FOX networks and utargetBrightcove and Bebo; and AOL and ESPN  are results of attempts to spread the net as wide as possible to maximize audience reach. Performance is also another topic that needs addressing. TV has always been a branding medium –>product placement has been the only in-content-type-advertising that is both costly and doesn’t necessarily translate into revenue or traffic. Video has the ability to solve for this given its emergence from the online world, which records tonnes of data on user behaviour and determines likely user propensities. Google has already started this process and is moving quickly to figure this out when the digital home environment comes to fruition.

Most importantly, before all this settles the public has to become comfortable with the notion of video interactivity and the plethora of possibilities from exploring new ways of publishing to new models of revenue generation. The music industry can definitely benefit by creating new engagement possibilities for their artists. It’s a matter of time…hopefully just around the corner…

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