• by Mark Walsh  @markfwal, May 21, 2008

When it comes to generating ad dollars, Web video is still far from ready for prime time. But that hasn't stopped startups and major media companies from trying to squeeze more than a trickle of revenue from the sea of video clips online.

Executives grappling with the challenge of monetizing short-form video discussed varying approaches to the problem during a panel convened Tuesday at the Streaming Media East 2008 conference in New York.

Extracting money from user-submitted content has been one of the main frustrations for video sites including YouTube. Advertisers have balked at placing their brands alongside unpredictable or inappropriate material uploaded by amateur videographers.

Video-sharing site Metacafe has addressed those concerns in part by having its editorial staff screen submissions. Only about 10% of videos uploaded actually end up being made available on the site, according to Allyson Campa, the company's vice president for marketing.

Metacafe, which has a monthly audience of about 30 million, relies on a variety of ad revenue streams including selling inventory through video networks, charging for prominent placement of promotional videos and offering overlay units within videos.

The site also uses Google's AdWords program for running display ads, although Campa said Metacafe ultimately hopes to drop AdWords when income from in-stream video spots increases enough to allow it.

Tom Buffolano, vice president and general manager for subscription services of CSTV Networks, was not as sanguine about building a business model around user-created video.

"User-generated content is a hard nut to crack because you're turning over programming to people who are doing their own POV stuff," said Buffolano. "You have to program for an audience and think of what you're trying to accomplish for that audience."

Given that CBS-owned CSTV operates a digital TV network and companion site focused on providing college sports programming round-the-clock, his take was not so surprising.

Campa and Buffolano also disagreed on the importance of video production quality to attracting viewers online. "Entertainment value is important but not necessarily correlated with production costs," said Campa, citing the popularity of the series of videos of objects being ground up in a blender.

Buffolano took the opposite view, saying that higher-quality videos lead to higher levels of engagement.

The panelists, including Christian Spinillo, production development strategist for video ad network PointRoll, however, agreed that promotional contests are an effective way to engage users on behalf of brands and advertisers.

"Wrapping video with special offers is something we think should help in the end to make sure there's more of a direct connection with advertisers," Buffolano said.

The CSTV executive criticized ad agencies, however, for a lack of sophistication when it comes to online video. "Agencies have to be much better educated to buy short-form video or online advertising because they're just not very discriminating in they way that they do it," he said.

Rather than treat video the same as TV, media buyers should better understand online metrics and the growing variety of ad options available for Web programming.

Spinillo agreed that a "sea change needs to occur" at agencies, but expressed optimism that a new generation of Web-savvy executives coming on board will help to close the knowledge gap.