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Online video CPMs can’t hold up April 26, 2009

Posted by jeremyliew in advertising, video.
8 comments

eMarketer has a couple of interesting charts on CPMs by media types.

First offline media:

Next online video:

Online video preroll CPMs are at $25-35.

TV CPMs are at $6-10.

Even granting some premium for preroll that has to be watched (vs TV which can get skipped), these CPMs can’t hold up.

Youtube to do $500m in revenue in 2009? March 16, 2009

Posted by jeremyliew in advertising, video.
Tags: ,
2 comments

Today in an article about Tim Armstrong’s departure from Google, the WSJ offhandedly says:

But advertisers mostly haven’t committed a large amount of ad dollars to these emerging areas. YouTube, for example, will account for only roughly 3% of Google’s net revenue this year, or $500 million, estimated Youssef Squali, an analyst at Jefferies & Co.

That Youtube revenue estimate is far higher than other estimates I’ve seen. In November, Screen Digest provocatively claimed that Hulu would catch Youtube in revenues in 2009, but at the much lower level of $180m. Said the FT:

Neither company breaks out its advertising revenues but Arash Amel, analyst at Screen Digest, forecasts that in 2008 YouTube will generate about $100m in the US, compared with about $70m at Hulu. Next year both sites will generate about $180m in the US, he says. YouTube currently earns around half of its revenues in the US, while Hulu has not yet launched internationally.

I suspect the $500m estimate of Youtube’s 2009 revenue is way too high, especially in light of the current advertising recession. What do readers think?

Advertisers and big internet companies get behind standards for online video advertising. January 28, 2009

Posted by jeremyliew in advertising, standards, video.
2 comments

Last week I missed the announcement of “The Pool“, a new initiative to help build standards in online video advertising:

Media companies including Microsoft, Yahoo, CBS’s CBS Interactive and Hulu.com are joining forces to attract more money to the fledgling online-video advertising marketplace by testing ad formats.

The project, dubbed “the Pool,” is the brainchild of Publicis Groupe’s Starcom MediaVest, which buys roughly $16 billion in U.S. ad time and space annually for big advertisers like Procter & Gamble.

Starcom MediaVest and sister agency VivaKi say they are trying to create standards in the online-video market, which is popular with consumers but hasn’t turned into a serious money maker.

The Pool, which includes six media companies and several marketers, such as Allstate, Capital One Financial and DineEquity’s Applebee’s, met in November, drew up a list of 30 online ad formats and whittled it down to five, which will be tested in focus groups this week. The two highest-scoring ad formats will be put into beta testing on the media companies’ sites. The Starcom MediaVest clients involved in the Pool have agreed to use the winning ad format and buy time on the media sites involved in the research.

This is a very exciting development and likely will be a great catalyst to help boost the online video market. The IAB put out their online video standards in August and the Pool is further momentum towards the standards that will drive this market forward. It’s very good news.

Next I hope we see a “pool” for social media, perhaps around engagement advertising?

Ad standards starting to work for online video; social media next? August 19, 2008

Posted by jeremyliew in advertising, social media, social networks, video.
3 comments

For a long time I’ve been calling for standards in social media advertising. Today if an advertiser wants to make a social media buy across multiple social sites, they will need to build different creative for each of the different social media advertising products on each of the major companies, Facebook, MySpace, Bebo, Rockyou, Slide etc.

Until recently, online video has faced the same problem. But in May the IAB approved new online video advertising standards.

Two studies have shown a positive impact from the establishment of the standards. Reports Wired:

Riddled with inconsistencies, video advertising has been a difficult marketplace to tap into. Advertisers are often forced to tailor creative for each video ad purchase, which is a big turnoff to advertisers looking to make big buys. Meanwhile, long, poorly formatted ads lead to a high rate of attrition by alienating viewers.

In May, the Interactive Advertising Bureau implemented standards to help streamline video advertising. Today, Break Media, an entertainment community for men, and Panache, a video advertising delivery-platform, released a study showing high rates of success with video ads since the standards went into effect.

Over an 11-week period, the study tested the success of the four standard formats for in-stream video advertising established by the Interactive Advertising Bureau: pre-roll, interactive pre-roll, non-overlay ads and overlay ads. Tracking advertisements for three large corporations — Honda, T-Mobile, and truTV — the study found that viewers had a high tolerance for pre-roll and overlay ads.

All of the four formats had extremely high click through rates. Completion rates for 15-second pre-roll ads were 87 percent, and 77 percent viewed videos with overlay ads for at least 15 seconds.

“Getting major advertisers major advertisers to move and turn into video advertising is going to take time,” says Panache CEO Steve Robinson. But he is enthusiastic about the new standards: “now you can just do the creative and know that it works.”

NewTeeVee notes another positive study:

Meanwhile, in a study of 100 campaigns and nearly 65 million impressions, Tremor Media measured 80 percent completion rates for both 15- and 30-second pre-roll ads. While the study’s size makes it more significant, Tremor did not look at click-through rates. Tremor said it actually saw slightly higher completion rates for 30-second ads than 15-second ones, attributing viewer willingness to watch longer ads to their placement next to high-quality content.

For Social Media to be a business we’ll need to see similar standards for social media advertising. This is why I think AOL buying Bebo is good for the industry. With AOL joining Fox as major media companies with a “dog in the fight”, hopefully we’ll move more quickly towards standards for social media advertising.

Online video CPMs are north of $15 July 24, 2008

Posted by jeremyliew in advertising, user generated content, video.
4 comments

TV Week reports on a new report from the Diffusion group on video advertising:

Professional Web programming yields very high CPMs, the report found. The CPMs for long-form online content are $40 today and will reach nearly $46 in 2013. Meanwhile, CPMs for short clips are clocking in at about $30 and will rise to a little over $34 in five years.

The CPMs for user-generated video will have the smallest rise, from only $15 today to about $17 in 2013.

While many have viewed this negatively because User gen video ad rates are lower than professional programing, I think that $15 CPMs with no content creation costs sound pretty good to me!

2008 Consumer Internet Predictions December 3, 2007

Posted by jeremyliew in 2008, ad networks, advertising, casual games, Consumer internet, games, gaming, mmorpg, predictions, semantic web, social media, social networks, structure, user generated content, video.
16 comments

Last year I made some predictions about the consumer internet in 2007 and they were at least directionally correct. So let me take a crack at 2008. Regular readers will not be surprised at some of my predictions as they are themes that I’ve been talking about for some time. Later in the week my colleagues will take a crack at predictions for Mobile, Infrastructure and Cleantech.

1. Social Media advertising, Online Video advertising and In-Game advertising start to become scalable.

Social media, online video and games are at early stages of development as advertising vehicles. Even more than the internet at large, a disproportionately small percentage of advertising dollars are being spent on these three media relative to time spent. Some people have even questioned if social media will be a media business at all, or online if video is a good way to monetize.

The slow start is because there are no standards yet in any of these media. If an advertiser wants to buy TV advertising across NBC, CBS, ABC and FOX, they can buy a common unit, the 30 second spot. If she wants to buy print advertising across Time, Fortune, Forbes, Newseek and Businessweek, she could similarly buy a common unit (e.g. a full page ad). But to buy across YouTube, Metacafe and Break, or across Myspace, Facebook and Bebo, or across GTA, Wild Tangent games and Pogo.com games, she needs to buy custom ad units in each property. This makes ad sales look more like business development – she is negotiating not just price, demographics and reach, but also what the actual units are. This is what makes new forms of advertising so hard. All three industries need ad unit standards to be able to scale. Otherwise they will be trapped by demands for customization.

This year, standards will start to emerge in each media. Some candidates for standards include (i) for social media; behavioral targeting, content targeting, demographic targeting or social ads, (ii) for online video; contextual targeting, overlays or pre-roll and (iii) for in game advertising; rich media or product placements. I don’t know which of these candidates will become standards, but I am confident that we will start to see growing support from both advertisers and publishers for the more successful units.

Ad networks will also gain share in each media, helping make the process of both buying and selling advertising easier.

Viewed through this lens, Facebook’s recent Beacon launch and subsequent adjustments are simply early moves towards figuring out what will be the native social media standard.

2. Structured web emerges.

The last couple of years have seen an explosion of user- generated content, across blogs, social networks, social media sites and user reviews. Previously, when most web content was created by editors, there was good structure and metadata around it. As most of the user- generated content has been unstructured, there has been an overall decrease in the level of structure, and hence a decrease in the ease with which people and computers can access and use this data.

But Meaning = Data + Structure. Search on user-generated sites has not been a great experience so far. This year we should start to see some point solutions emerge to help add structure to unstructured data, substantially improving the user experience. This will include both explicit (user-generated structure) and implicit (inferring structure from domain knowledge or user behavior) methods.

3. Games 2.0

Tens of millions of users are now using casual immersive worlds and playing MMOGs. These sites are some of the stickiest on the web, resulting in some of the highest levels of time spent per month online, and indicating that this is becoming a primary form of online communication for some users. Many of these users skew young, and if you believe that demographics is destiny, then you will expect this behavior to spread. The social aspects of these games is key to their popularity

Even more people are playing casual games online. These people often don’t have the ability to commit the time that MMOGs demand. They want to play with their friends, but instead of spending hours online together, they want to do it on their own schedule and in bite sized chunks.

These trends are likely to come together in asynchronous multiplayer games.

Other key drivers of growth for these products will include innovation in business models (free to play, ad- based and digital goods- based models) and channels (in- browser gaming, mobile, widgets).

Note – this post is cross posted to Venturebeat.

Online video advertising takeaways November 15, 2007

Posted by jeremyliew in ad networks, advertising, branding, business models, video.
6 comments

I moderated a panel today at NewTeeVee Live, which was one of the best conferences that I’ve attended this year. Kudos to Om and Liz for putting together a great show.

The four panelists were all CEOs of video ad networks. Jayant Kadambi of YuMe, Tod Sacerdoti of Brightroll, Matt Sanchez of VideoEgg and Matt Wasserlauf of Broadband Enterprises did a great job of discussing some of the challenges and opportunities in the industry.

Here are some takeaways from the discussion:

    Online video is a brand building medium, bought on a CPM basis.

    Ad buys today are coming from three buckets; TV budgets (the big opportunity, but further away), online budgets and experimental budgets. Video content coming from TV and other traditional video producers is most likely to win buys from TV budgets. Native online video content still coming from experimental budgets.

    To get to a scalable online video ad business, the key barriers are (i) standardization of ad units, (ii) standardization of ad serving infrastructure and (iii) standardization of measurement/metrics.

    There is tension between highly effective preroll ads and user friendly overlay ads (with a user initiated play), but these are the two most common ad units and most likely to become a standard. In-banner video is also popular.

    Big Media companies prefer point solutions for online video so that they can sell and control their own inventory; smaller online content owners want a packaged solution that delivers all elements of the value chain (ad sales, ad targeting, ad inventory management, ad serving, ad measurement) from a single provider. There is increasing pressure to create standards in ad serving from the large media companies so that multiple sales forces can sell ads without having to implement multiple serving solutions.

    Advertisers are buying content adjacencies today as a proxy to demographic targeting, but they would prefer to buy demos directly where they can

The four panelists really engaged; it was a pleasure to listen in to their conversation. You can read the transcript of the panel here.

How bad is web video for TV? November 9, 2007

Posted by jeremyliew in media, video.
1 comment so far

Via NewTeeVee, the Freakonomics blog asks, “Is web video really hurting TV?”

Read the whole thing, but in summary it says that entertainment consumption isn’t zero sum. A study of typical web video viewers found that they watched 4 hours of video online but only reduced their TV watching by about half an hour. Most of what they watch online they wouldn’t have watched on TV, and in some cases, watching a preview or single episode online prompted them to watch more of that show on TV.

If this is true, then it suggests that if the right ways to monetize online video can be found, then we may see media companies stop suing internet companies.
It definitely makes the writers strike over new media royalties seem more understandable.

More online videos than search (soon!) October 12, 2007

Posted by jeremyliew in advertising, business models, Consumer internet, Search, video.
5 comments

Tod Sacerdoti, CEO of the online video ad network Brightroll, notes that video impressions will soon pass number of searches.

1. U.S. video impressions will pass core search impressions in the next three months
2. U.S. video impressions will pass expanded search (meaning including Amazon, eBay, etc.) in the next twelve months.
3. Video advertising spend is being underestimated by analysts (eMarketer currently estimates video will grow from 10% to 25% of search revenue, and from 5% to 12% of total online ad spend, over the next five years)

As with all audience shifts, such as network television to cable television or television to the Internet, ad dollars will follow the audience. However, it does take time, as the network to cable transition took 5+ years and we are still in the midst of the spend movement from television to the Internet.

My bet? I estimate that video advertising will be 50% of search revenue within the next five years and will be larger than the entire search advertising business in the next ten years.

A couple of years ago, when I was running Netscape, the average revenue per search was about 2.5 cents when factoring in sponsored link click through rates and average CPCs. That translates to about a $25 CPM. Web video eCPMs may end up in a lower range than that, although premium video advertising inventory is certainly in that range today. This bodes well for Todd’s projections.

Liz Gaines at New Tee Vee weighs in with her opinion here

Will contextual advertising work for online video? August 27, 2007

Posted by jeremyliew in ad networks, advertising, contextual targeting, video.
12 comments

I posted last week about why I though that Google’s new overlay advertising product would be good for the whole industry; Gootube has both the volume of inventory and the advertiser relationships to make the overlay a standard ad unit.

The other notable thing about Google’s new ad product is how the ads are being targeted, or rather how they are NOT being targeted. The New York Times quotes Eileen Norton, Google’s Director for Media Platforms:

Ms. Naughton also said advertisers would be able to take aim at specific channels and genres, as well as demographic profiles, geography and hour of the day.

What is notably missing from this list, especially from Google, is contextual targeting. I wonder if this suggests that contextual targeting is not as important for online video ads as it is for text link ads.

Online, Google’s adsense has been the premier form of contextual targeting, and it is primarily about direct response.

Television advertising is primarily about branding. Direct Response TV (infomercials) make up a very small fraction of TV advertising and they typically run in latenight and overnight time segments when both ratings and ad prices are low.

The question is whether online video advertising will look more like online, or more like TV.

For long form video online, it seems less likely that contextual advertising will be a good match. Long form video is more of a “lean back” experience, where the viewer is less likely to click on any ad, even a highly contextual one. That makes it hard for direct response advertising to work.

Short form video online may be more promising as viewers may be more willing to click away. People from online video analytics comapnies tell me that less than 50% of online video streams are watched to the end, with the bulk of the drop off occurring in the first 20% of the stream.

When you combine this with the fact that both Youtube and VideoEgg are seeing click through rates on their overlay ad unit 5-10x higher than typical online banner ad click through rates (according to the NY Times article), it seems more possible that direct response advertising will work for short form video online.

But two factors complicate this situation. The first is that neither Youtube nor VideoEgg are actually using contextual targeting today. The second is that the current advertiser base for VideoEgg appears to skew heavily towards “cool” entertainment ads (gaming, movies, TV and music), or at least so it appears from their sample advertisers. The same is true of the few Youtube ads that I have seen “in the wild”.

These early adopters may have more compelling video ads that are not as representative of the mass market – it may be easier to get someone to click away to watch a Superbad trailer than an ad for Tide, even a good one.

If indeed it is true that targeting against channels, genres and demographics is sufficient for video advertising, then this is great news for online video startups. Google accuracy at contextual targeting its text ads benefits greatly from the vast volume of ads that it serves, and from its very low cost compute infrastructure. Targeting against channels, genres and demographics requires a lot less volume and a lot less computation, which levels the playing field substantially.

I’d be interested to hear what readers think about whether contextual targeting will be the way forward for online video advertising.