Mid-roll is a great step forward for Facebook revenue generation for publishers, which will help with margins and lessen their reliance on YouTube. But it will still not be large enough to swing the direct sales and revenue opportunities, since the value of traditional mid-roll advertising has always been lower than pre-roll. Thus publishers should remain focused on improving the premium O&O video experience. This is where they enjoy the highest margins and as well as the revenue multiplier effects that result from personalization as new visitors watch the most relevant content from the library and become loyal viewers.
The argument is pretty straightforward: You need to make sure you’re positioning your content and providing the user experience to succeed in places where you have the highest revenue potential, including O&O. Typically, O&O sites have better targeted audiences and advertisers are willing to pay a premium to access them, at around $20-$30 CPM (and much higher for super premium such as the Wall Street Journal). Social has scale, certainly, but not the targeted audience of a premium publication, and publishers can typically make less than $1 CPM. Furthermore, the audience is in a “walled garden” and the platform is more incentivized to get users to watch more content there, rather than engage with the content of any individual publisher.
The O&O strategy is basically about making the pie bigger, rather than viewing it as a zero-sum game. The real challenge in digital distribution is figuring out how to manage or balance release windows for video in order to capture revenue while getting the most eyeballs for your content.
If we use the sales analogy of the buyer’s journey, then social would be the “awareness” stage, a click through to an O&O website is the “consideration” stage, and watching and engaging video on that O&O is the “decision” stage. When you get a viewer to watch content on your O&O, it’s a sale, and all the incremental follow-on views and repeat visits as a result of personalization are the up-sell or cross-sell. As the old marketing aphorism goes, it’s more profitable to sell more to fewer customers than acquiring more, but selling only once.
By the same token, smart digital distributors shouldn’t fear losing control of their audiences to social media, but rather treat it as a lead-gen tool to increase the volume entering the sales funnel. O&O sites can personalize the user experience and program content to users on a one-to-one level, surfacing the deepest parts of the library to those users most willing to watch.
With the right AI and programming tools, publishers can turn a video end-point into a video entry-point, resulting in follow-on views and engagement similar to that of social. The only publishers who should fear the platforms are those without a strategy or way of programming content to users effectively on their O&O, because in their case the funnel doesn't lead anywhere.