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How to monetize UGC video June 28, 2007

Posted by jeremyliew in advertising, business models, Consumer internet, Internet, social media, user generated content, video.
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Over at NewTeeVee, Liz Gaines says that Ad startups are turning away from user generated video. She says that all of the online video ad startups that she is interviewing these days are focusing on professional video over user generated video, calling out Kiptronic, Blinkx, DigitalSmiths, Brightroll, YuMe, Adap.tv and Broadband Enterprises by name. She says that only Scanscout hasn’t dissed UGC.

Liz did omit from her list VideoEgg, which is taking on monetizing UGC head on (with social networks like Bebo, Tagged, and Dogster among its client list) and making some good headway. Notwithstanding what they told Liz, Brightroll is also serving a lot of UGC video sites.

But Liz is right, advertisers prefer professional video inventory. The market has spoken. These startups are going to where the money is, and today, its easier to monetize professional content than user generated content.

However, there are a lot of “shades of gray” between professional and user generated video. Its worth while parsing out some of the issues that separate the two:

    Professional content can guarantee no “Objectionable content” that would be problematic for an advertiser (e.g. hate speech, risqué content, violence etc); UGC can not.
    Professional content can guarantee to not have copyright/rights issues; UGC can not.
    Professional content tends to have better metadata for targeting advertising than UGC.
    Professional content tends to have higher production values than UGC.

The first two of these are show stoppers for many advertisers. Proctor and Gamble or Budweiser just can’t afford to have their ads show up next to videos of naked people, neo nazis or street brawls, or against copyrighted content.

The other two are a matter of degree – they just affect CPM. Diggnation for example, which comes close to UGC on production values and has limited metadata for targeting, has no problem getting advertising because it keeps on the right side of the line on the first two points.

I think that if we see user generated video that can guarantee no “objectionable content” and no copyright violations, and if it has the ability to target ads well (e.g. through a synthetic channel, or behavioral targeting), then lower production values will not prevent a healthy market for advertising against this inventory. Examples might be sites like Turn Here, Diversion Media and VoD Cars.

I’d love to hear reader’s thoughts.

Also, please don’t forget to switch your RSS feed to feeds.feedburner.com/lightspeedblog if you haven’t already.

Comments»

1. Emil - June 28, 2007

“Quality” and “Production Values” are critical components to success with video. But the barrier to success is MUCH lower than you think and it lies in places where most people are not focused.

“HD vs SD” and “Resolution” and “Photographic Composition” are largely irrelevant if you have something that can’t be seen anywhere else. If there were multiple choices for something that appeals to an audience, the higher quality (relative to access method) might edge out the lesser quality variants.

But in a world where niche audiences are starved for something new, fresh and exciting, the quality thresholds are in vastly different places than the digerati and non-audience-focused media-professionals might think.

Check this:

http://www.vodcars.com/episode/102

Do I wish this clip was higher resolution? Yes. Did it stop me from delivering several hundred thousand viewers in the first week? No. If it were “higher quality” would I get more users? Maybe — but you run the risk of a bad user experience with more data to push down the pipe…

Oh, and check the most recent episode of VOD Cars. Submitted by the filmmakers. THAT’s UGC. It’s not typical. But according to definition, it’s UGC…

PS: Greets to Jeremy!

2. Jay Gould - June 28, 2007

I wouldn’t say that the content has to be “professional”, but it certainly has to be editorialized for the brand advertisers.

3. Owadenko - June 30, 2007

We, at Trivop – 1st videoguide for hotels – have really the same feeling as you. That’s why we are actually producing hotel content…
Produce a movie is not as easy as produce a post on a blog and audience needs quality that’s what we will achieve to let people watch their hotel before booking. We clearly thing that produce content on niche is the best way to go but the only condition is to get control on costs (i.e process, workflow…) and invent a new way to produce quality content with cheap prices…A kind of easjet for the video production.

4. Colin Donald - July 2, 2007

There’s another way of looking at the whole issue though. The most radical challenge of YouTube et al is that Internet users often prefer “amateur” content to professional productions. From that starting point, it doesn’t matter that the advertisers and ad networks want to reinvent the cosy old television model of professional shows with interruptive commercials, but just online. If people aren’t watching, it’s game over.

When my company, Futurescape, was researching brand marketing via YouTube for our report From TV Ads to YouTube Engagement, we identified a range of methods by which major brands become involved in online video communities. These include McDonald’s putting a top quality UGC animation on the YouTube home page and Stride sponsoring Matt Harding to make his world trip dance video.

The real future is in brands carefully developing a relationship with online video communities, not just slapping ads against pro content.

5. Patricia - July 3, 2007

@ Colin, I disagree – the users have not had significant enough choice in professional content for anybody to say that they prefer it. Up until the past two years, very few companies were doing any content, of any type, online, leaving a huge white area for users to generate their own. We would be very naive to believe that users prefer anything when the majority of content they have had to choose from has been user generated.

There’s plenty of disruption now, but I believe video – which will be tv – of the future will actually mirror what we see today (and the brands will pull the eyeballs away from social networks, etc.) with the only difference being 1. it’ll be on the device of choice. and 2. users will be able to control when they view it (like Tivo). Big brands like Fox, CBS, etc. are hardly going to allow such a big slice of the pie go elsewhere, and nothing – truly – has really changed about the consumer: he/she can still be led, even with heavy competition and slightly more control.

I don’t think advertisers need to become part of the communities. I think the rest of the business world needs to stop seeing the internet as it does, and understand that much less has changed than they know.

Just my .2. Great post, Jeremy.

6. SplashCast: Channel Yourself Across the Web - July 19, 2007

[…] involved in monetizing user generated content (UCG). As pointed out in posts by Liz Gannes and Jeremy Liew there are certainly challenges. For example, they both correctly point out that “professional” […]

7. video - August 11, 2007

thanks for video

8. Anubhav - May 14, 2008

Content is now the fastest commodity on the web. It is being produced and consumed by the users in an infinite cycle. The future of content is with users. I have an interesting video to showcase the same and future of media at

http://likeiknowit.wordpress.com/2008/05/14/prometeus-the-media-revolution/


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