What Red Bull And Felix Baumgartner Taught Us About Online Video

Last week, YouTube announced a new, nifty analytics feature that captures how many minutes your audience watched of your content.  For example, in the past 30 days, one company's viewers (yes, mine) watched 15 million minutes of content; that's 29 years of content!  But who’s counting?  (Apparently, YouTube).  Going all the way back to 2007, those viewers have watched 400 million minutes -- or a whopping 760-plus years worth.

It’s incredible, but more importantly, it’s scary.  Let me explain.

It’s widely known that a 30-minute television show actually only has 22 minutes of content; the remaining 8 minutes are filled with ads.  So the ratio is almost 3-1.  I know I’m comparing apples with oranges, but if in theory over time CPMs for television and web audiences will converge, then to ensure that advertisers get the same value, and for the online video ecosystem to be sustainable, then it’s interesting to see if producers can garner the same ratio of ads to their content.  The Internet continues to grow in size, but the growth rates are definitely slowing down, judging by the latest IAB numbers.

In any case, YouTube is very global: assume 50% of the audience is outside of the U.S.  In our case, that leaves 7.5 million minutes of content consumed over the past 30 days.  Maintaining the same 3-1 ratio, that means we would have needed 2.5 million minutes of ads to maintain the same economics as TV. 

Problem?  According to comScore, YouTube generated 142 million ads in aggregate during the month of August.  I can tell you that we didn’t generate 2.5 million minutes of ads on our YouTube channel, but to illustrate my point, we would have had to generate 1.7% of YouTube’s ads (2.5 divided by 142) to have the same economics as TV. 

What are the chances that we ever account for 1.7% of YouTube’s daily ads?   Not likely.

How many minutes of ads did we likely account for?  YouTube is known to generate over 2 billion impressions per day globally, assume it generates 1 billion in the US; we account for 0.01% of those, at best.  So if the economics ought to be at 1.7% but are in fact at 0.01%, then YouTube is orders of magnitude away from where it needs to be, so to speak.

Ironically, while people have written about the death of the 30-second spot, I think ‘tis the pre-roll that is going to die.  Hold on -- that doesn’t mean the pre-roll will go away, but the pre-roll will become the display ad of its era. 

As much as branded content hasn’t delivered the goods, this weekend something happened that made me realize branded content stands a chance to emerge as a viable form of advertising, after all, even though in the past I’ve questioned its long term viability for a myriad of reasons.

When Red Bull sponsors the Austrian skydiver Felix Baumgartner – a bloke whom 99% of folks haven’t heard of – to freefall from space, you know that marketing and entertainment is changing.  That is obviously a unique, crazy-expensive, wildly entertaining and rather risky experiment, but what Red Bull effectively did is “create its own inventory” out of thin air, price the metrics itself, and do away with either the 30-second TV spot or the pre-roll.

I’m not telling every producer or marketer to emulate Red Bull – Red Bull is obviously a very unique brand. But the underlying lesson is that content is king, the experience is the deal-breaker and frankly, most of us are thinking about “online video marketing” in very antiquated terms. Unless we realize that the inefficient pre-roll/CPM model is flawed, if not fatally broken, then the real opportunities provided by the Internet will pass us up as fast as a crazy flying Austrian falling from the skies.

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7 comments about "What Red Bull And Felix Baumgartner Taught Us About Online Video ".
  1. Diana D'Itri from IDR Broadcasting , October 15, 2012 at 10:55 a.m.
    Saying preroll is going to die because it's a flawed model is like saying TV commercials are flawed because no body likes to watch them. The article makes some good points when comparing online to offline commercial viewing but the reality is, advertising is a necessary evil and it's really only evil to those who are forced to watch ads in exchange for content. Because advertising plays many roles in ROI (brand awareness is one that is difficult to measure) you can't throw the baby out with the bath water, heck even print isn't dead yet!
  2. Ashkan Karbasfrooshan from watchmojo.com , October 15, 2012 at 11 a.m.
    Diana - great point. But to be fair, I used "death" figuratively, to argue that pre-rolls are "just as dead" as any other advertising including TV's 30 second slot... after all, I said it will become like displays.
  3. Mike Einstein from the Brothers Einstein , October 15, 2012 at 11:02 a.m.
    Ash, You're attempting to paint a black and white picture of a very gray subject, to wit you haven't figured pre-roll abandon and skip rates into your calculations. And just because a viewer doesn't abandon a pre-roll ad outright and jump ship, doesn't necessarily mean the ad is being seen. In fact, I would contend that a 40% abandon rate speaks volumes about the 60% that don't abandon. Your numbers assume those 60% are viewing the ad - specious reasoning at best and pure denial of on-demand consumer behavior at worst. We all know exactly how these ads play out. Viewers that don't abandon them outright are merely enduring them, consumed more with the time counter in the lower right corner of the video screen than with anything happening on the screen. And we have ourselves to blame. By reducing our world to events that were "so fourteen seconds ago", a :15 pre-roll becomes a virtual eternity.
  4. Doug Garnett from Atomic Direct , October 15, 2012 at 12:33 p.m.
    Actually, I think this viewership proves a different point - that traditional media is the best driver of demand. We wouldn't have known about this happening if it hadn't been covered so thoroughly in offline sources. I also don't think it proves anything about the potential for branded content. This jump was a truly once in a lifetime event (breaking records set in the 1960's?). So these viewer numbers really suggest that the opportunity to high online viewership is extraordinarily limited.
  5. Mike Einstein from the Brothers Einstein , October 15, 2012 at 12:54 p.m.
    Good point Doug. In fact, don't you find it curious that the brands with the biggest vested interests in digital - Apple, Bing, Samsung, Google, Yahoo, eBay, HP, etc. - all use TV to get the word out? Amazon? It's a big river in Brazil, right? Branding is a function of scalable reach, and reach is an audience measurement, not a supply-side metric. Put another way, if any of these digital impressions actually stuck, we wouldn't need billions of them.
  6. Jon O'Brien from New Antics , October 15, 2012 at 3:48 p.m.
    Love your numbers breakdown on pre-roll being far behind the value of TV spots. YouTube has a ways to go for monetizing content. But for Red Bull and the notion they ditched pre-roll, I'll bet you a case of energy drinks that they release pre-roll and TV spots using the footage from the event. It's brand marketing and those stunts translate perfect to display advertising content.
  7. Greg Bobolo from SendtoNews.com , October 29, 2012 at 4:33 p.m.
    Good article Ashkan... Diana/Ashkan the difference (IMO) between a TV commercial and a pre-roll is that the TV commercials give you something before they take something. This is my biggest beef with Preroll advertising. Pre-roll will in time go away (I believe) and video advertising needs to evolve. Online video advertising could benefit from mirroring some linear TV ads that offer a more equitable relationship between viewer and advertiser. Giving the viewer some content before attempting to take some of their mindspace is a relationship where the value exchange is more palatable.