This past week I was talking to a media executive and told him about our 2010 decision to shift away from generic lifestyle content (skewed towards females) towards pop culture infotainment that men were interested in. He looked at me like I was an alien, asking: "Why would you do that?"
It was a fair reaction, considering that consumer packaged goods advertisers represent the largest category of video ad buyers -- almost 25%, according to Q4 data from Videology. Now, to be fair, CPG doesn't automatically connote a women's demographic, but all factors being equal, it sort of does. Plus, despite the rush to embrace programmatic ad buying, if marketers still book campaigns by content, then the logic is that CPG marketers would embrace lifestyle over factual infotainment.
I outlined our rationale in last week's article. In short, lifestyle content tends to be fairly generic, with very little differentiation. In other words, fitness tips and cooking videos serve a utilitarian purpose, but by and large, they fail to develop a really passionate audience. So at a time when anyone is a producer, in order to cut through the clutter, you need to have a certain line of programming that audiences wake up for. I'll be the first to admit that I didn't initially put a big enough emphasis on this, but that's partially because I wanted to cast a wide enough net and build a diversified revenue stream before focusing on one particular segment.
It seems that for advertisers, what kind of videos you produce doesn't really matter, provided your content is professionally produced. Indeed, according to a report by FreeWheel, video ads grew at over twice the rate of video content views: 49% to 23%. While this seems like a particularly rosy outlook for the online video industry, Freewheel contends: “if new opportunities for distribution and syndication aren’t created and more content isn’t made available online, advertising revenue potential will stall, as there is a limit to the number of video ads that can be placed in a single piece of content.”
So perhaps the kind of content you produce is actually quite important -- because you need to increase the number of views going forward to maintain the breakneck pace of video ad growth. After all, if someone is looking for a recipe, they will only watch one, maybe two videos before they find what they are looking for. But when it comes to entertainment content, the sky is the limit. Ideally, if you can build a bridge between factual and entertainment, then you create a higher propensity for viewers to sit through an endless array of videos.
What exacerbates the outpaced growth of video ads relative to video content is the ongoing shift from desktop to mobile. Indeed, only 5% of ads are on mobile. But when you consider that YouTube, the world's top video site, generates 30% of its views on mobile devices, you have to wonder if we're facing a perpetual shortage of video inventory. If that's the case, then perhaps, just perhaps, CPMs will pull a 180 and start to go up.