Commentary

Will Video Help Portals Restore Old Glory?

The Three Amigos

Content, commerce, community: the 3 Cs that served as the foundation to any portal strategy.  In the 1990s, a portal was synonymous with power.  Today, the term is almost derisive.  The portals who survived the 1990s were Yahoo! MSN and AOL, though none of them got through the 2000s unscathed.

The last decade saw search overtake display as the main driver of growth in online media.  This decade, the catalyst will be video, which after many years of hope (and hype) is poised for mainstream success: eMarketer forecasts online video advertising in the U.S. will grow from $1 billion in 2009 to $1.5 billion in 2010.  That trend sees no stopping in sight.

According to comScore MediaMetrix and Citi Investment Research and Analysis, the time spent on Yahoo and AOL has fallen (while MSN has remained flat) while Google and Facebook's has risen.  As such, should it come as any surprise that video content will play a central role in the portals' comeback plans?

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AOL's focus on content and video

By and large, initially portals invested or acquired commerce and communications capabilities but licensed and aggregated content offerings. Over time, for strategic and financial reasons, portals began to invest in proprietary content, as well.  But to this day, most portals are known as aggregators.

Today AOL announced a new AOL.com, emphasizing video, betting that users will be interested in coming back on a regular basis for video programming.  Will it work?  Time will tell.

Nowadays, it's hard to talk about the kings of the Web without mentioning Google, Facebook and to some extent, Twitter too.  Google was the anti-portal and Facebook and Twitter would rather die than be branded as such.  But when you step out of the echo chamber, it's difficult not to be amazed by the reach and financial performance of the portals: Yahoo, AOL and MSN.com

Last week Microsoft announced massive losses of $560 million for its "online services division,"but its quarterly revenues rose 8% to $527 million, or an annual run rate of over $2 billion.  It's worth noting that Microsoft is investing heavily in its cloud computing and search infrastructure. MSNBC.com has remained a leader in video and MSN.com has produced and licensed videos for a while, though it too fell in love with the UGC wave through the ill-fated Soapbox project.

AOL admittedly has its work cut out for itself: its dial-up business continues to shrink while its media business loses money, but CEO Tim Armstrong continues to sharpen the company's focus and acquire video and content assets in order to reposition the company.

Meanwhile, the granddaddy of portals, Yahoo, last week hired Ross Levinsohn as executive vice president of the Americas, reporting to CEO Carol Bartz.  Granted, what Yahoo plans to do in video technology and/or content is anyone's guess, but with Levinsohn at the helm, it's a safe bet to suggest that the answer is something, and soon.  In fact, while Facebook briefly surpassed Yahoo as the number 2 video destination after YouTube (according to comScore's August 2010 rankings), Yahoo managed to reclaim the number two slot the next month, suggesting that it plans to get more serious and proactive with video.  We shall see.

What a difference two years make

While it's easy for those on the front lines to forget this, the broader climate around online video has drastically changed -- for the better. 

For one, YouTube is a business now.  Second, despite the challenges posed by its fickle owners, Hulu is a success and that bodes well both for television programming online and for professionally produced, premium online video.  But more importantly, look at how high the portals prioritize video.

AOL has all but banked its strategy on it.  Yet just two years ago, AOL felt social networking was so central to its (and the Web's) future that its then-leadership felt compelled to pay $850 million for Bebo; not Facebook, or even MySpace, but Bebo. 

Granted, the management has changed and now everyone admits it was a bad deal --  but more important, everyone also concedes it was the wrong focus.  According to the Online PA's Internet Activity Index, consuming content is the most popular activity online, with a 38% share of time spent.

Obviously, over time the kind of content we produce in video will change.  After all, throughout history, we've seen this trend repeat itself: movies initially captured theater plays on camera; television involved filming radio shows on film. Clearly both forms of media evolved.

Social Media is Public Relations 2.0

AOL's Bebo debacle was representative of a broader reality: while social media has definitely changed marketing, it has flopped as advertising

Yes, Facebook is going to be generating oodles of money, but that has more to do with its sheer size than marketers' affinity for social media.

In fact, social media is proving to be more public relations than advertising.  This is important for marketing professionals to realize and account for.  In fact, when it's said and done, marketers need to advertise more to offset the negative impacts of social media for their brands and the positive impacts of social media for their competitors.  To me, that means social media is the evolution of PR first and foremost.

When it comes to advertising, it's always been about the content and the audience.  No wonder, then, that we are seeing a flight to quality content.

4 comments about "Will Video Help Portals Restore Old Glory?".
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  1. Joe Bencharsky from iNet Entertainment, November 1, 2010 at 11:32 a.m.

    As I have repeatedly stated: portals, (and apps for that matter) are merely means of organizing content for individual users. As technology develops to help users organize their information streams and customize them, both the portal and app models will vanish. Quality, relevant content does motivate and drive users, and marketing and advertising need to adapt to this obvious need. Learn to use the tools of tech!

  2. Jeff Bach from Quietwater Media, November 1, 2010 at 3:30 p.m.

    <p>To me I think that as fragmentation continues and search engines get better, people will be going to more and more sites in smaller and smaller numbers. We will still have a gazillion people online, but they will be spread out across half a gazillion sites. The result of this fragmentation is that no one site is capable of generating ad-viewing-based revenue, since each site is attracting a very small (but very interested) group of viewers.</p>

    <p>How does a creator continue creating if the viewers/visitors are loyal and interested but small in number? Sponsorship and subscription are the two things that come to my mind. Not ad viewing.</p>

    <p>Ad viewing is a numbers based game that favors portals and lots of people going to only a few places. That is not the way things are trending. Knitters are going to find their knitting site. Kite fliers are going to find their site, horse lovers will find their site, yada yada yada ad infinitum. </p>

    <p>To me, the conclusion here is a very very wide but very very shallow marketplace. How can ad viewing work when there are a gazillion sites with each one being viewed by a thousand viewers per month? Subscription and sponsorship works in this world. Ad viewing does not.</p>

    <p>Search engines are enabling us to get exactly what we want. The resulting fragmentation and specialization are only going to get bigger and yet they will offer viewing numbers that only get smaller.</p>

  3. Kelly Wenzel from Centro, November 1, 2010 at 4:01 p.m.

    Good read. Thanks.

  4. Jonathan Mirow from BroadbandVideo, Inc., November 3, 2010 at 4:49 p.m.

    Yeah, I took a look at the new AOL site. Here's a challenge: open up Yahoo.com in one browser and AOL in another. Scroll them both down so you can't see the logo. Call somebody into your office and have them tell you which is which. OMG! AOL spent millions to re-invent the number two (and shrinking fast) search engine! Who says those guys aren't at the top of their game? AOL = Always Off or Late. Sheesh. Hey, watch my weekly media commentary Video Blog at http://www.youtube.com/warehouse38tv#p/a/u/0/1lUhuh8LtdQ

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