Commentary

What's the Problem With Online Video Advertising?

Trying to parse the following two news headlines about the wonderful world of video is giving me an Excedrin headache.

"Broadcasters Fare Surprisingly Well in Ad Sales," said The New York Times in a wrap-up of this year's network TV upfront, which saw the nets bring in just about the same amount of money they did last year -- a little north of $9 billion -- despite declining viewership.

"YouTube: You Created the Content, Now Sell the Ads: Google, Looking to Monetize Video Site, Is Letting Content Producers Sell Advertising on Their Branded Channels" said Advertising Age in a Monday front-page story, which points out that the under-monetized video site had 4 billion (that's billion with a "b") video streams in March.

So, in other words, as YouTube remains the be-all and end-all of online video (admittedly, some of it of cats peeing in toilets), it can't catch a break when it comes to taking all those eyeballs and converting them to cold, hard cash. Something tells you that if YouTube were more successful in selling the inventory itself, it wouldn't be outsourcing. The Ad Age story points out that even at a highly optimistic revenue estimate, of $200 million a year, YouTube still accounts for only a smidgeon more than 1% of parent Google's revenue.

Meanwhile, the broadcast nets keep that money flowing in because fewer people watch them. What? Since advertisers and media agencies haven't taken the time to figure out how to follow eyeballs to the Internet -- hey, we're only 14 years into the digital revolution -- they have to put more money into traditional media to get the same number of eyeballs that they have in the past, all of which squeezes inventory and raises prices. It's perverse. On top of that, some of the nets layered on this neat trick during this year's upfront: by selling 80% to 85% of inventory in the upfront as opposed to the usual 75%, they more or less ensure that prices in the scatter market will skyrocket, so their overall take during the upcoming TV season will probably increase.

What does all this have to do with social media, you ask? Let's remember that YouTujbe is a social media site, and that's part of the problem. Advertisers haven't yet gotten comfortable with much of the content, but something tells me that much of it, even if amateurish, is still monetizable. What YouTube needs to do is find a way to make it easier to figure out what that content is, and to cluster advertising ops that are both non-objectionable and really popular. If YouTube is doing this already, it can't be doing much of it.  I'm on the site nearly every day, and video advertising on it is practically nonexistent, except for the front page video box. Advertisers and agencies should be showing an interest in developing a solution as well, with 4 billion monthly views at stake. It's as though they're ignoring a broadcast network.

Meanwhile, while no one solves the problem, those improbable, but probably monetizable, YouTube hits keep popping up. Who could forget the insanely popular "Bus Uncle" from a few years back, or, for that matter, LonelyGirl15?

There's something wrong here, but I don't know what. Gotta go grab an Excedrin.

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