Is online video advertising undervalued? The online video ad market is estimated to grow to between $2 and $7 billion by 2012. But that's still a drop in the bucket compared to the $70 billion television ad market.
Online publishers and advertisers are frantically creating new formats and content to entice viewers online, but the hurdle in online video ad profitability may have less to do with the quality of the advertising than the quality of the audience.
Thanks to shows like "The Simpsons" and "CSI," Hulu is finally charging more for ads online than during primetime.
According to June Sanford C. Bernstein & Co. report, Hulu is charging almost double the rates FOX gets for the Simpsons online. Fewer ads served during the program means that these shows are still making less money online, but the higher rates are indicative that when audiences move online, advertising will move with them.
Comcast and Time Warner are pairing up to offer more of their content for free online — to people who already subscribe to their cable channels on television. Starting in July, the cable companies will let a group of about 5,000 subscribers access that content online.
The new model will make it harder for people to access television content online for free. And while cable companies will not yet be able to monetize online viewing as profitably as they do offline, the migration of their content online should help them get a foot in the door for charging for that content down the road.
Offline advertising may be suffering right now, but that doesn’t
mean that online brands can’t still profit from it. According to AdWeek, online entities like Zappos, Amazon and Kayak are working with traditional agencies — and advertising — to fatten up their
profits. But the thing they still needs to get worked out is how to measure the effectiveness of cross-channel campaigns.
Trying to foster more brand awareness and utilize growing budgets, online companies are looking past search and display toward more traditional methods. Barry Lowenthal, president of The Media Kitchen here, a unit of MDC Partners' Kirshenbaum Bond + Partners, tells AdWeek that television ads bring "people into the fold that
aren't already participating in the category or, if they are already
participating in the category, might not be considering your brand.
It's much higher up the purchase funnel.”
The Wall Street Journal may be getting more expensive. The business paper has been making headlines of late for growing its revenues behind a pay wall while other papers are bleeding ad revenue. But is the Journal the exception to the rule, or just ahead of the curve of paying more money for content?
Speaking at the Digiday: Networks conference in New York, Brian Quinn, the Journal's vice president of digital ad sales, said that the newspaper is so happy with its subcription results that it is looking to push the website toward a "hyperpaid" model. And Quinn said that there are initiatives across Newscorp trying to try to get people to pay even more for its content.
Just last week, former AOL exec and current Chief Digital Officer at News Corp. John Miller suggested that Hulu content might soon go behind a pay wall. But will charging for content work for all Dow Jones properties?
Hulu has fast become one of the internet's top destinations for professional video content. With free high-def programming from the likes of NBC, FOX, Comedy Central and many others, it's not hard to see why.
There's only one problem: it's only available in the United States.
Pepsi may not be rolling out its new retro logo in Europe for another year, but the soft drink giant is making use of its old school theme somewhere - in new media. Pepsi's new logo, which borrows from an older aesthetic (and has noted similarities to the Obama campaign logo), is now latching on to the popularity of nostalgia shows online and pairing its new "Pepsi Throwback" with 70s and 80s shows on Hulu.
Three 15-second ads will promote Pepsi's new product made
from real sugar, an ingredient that was dropped in favor of by corn syrup in
American soda products 40 years. And the spots will match the enthusiasm for nostalgic shows like Hill Street Blues and The
Mary Tyler Moore Show, replete with Pet Rocks, shag carpeting, and fondue pots.
Hulu's meteoric rise as the online video site of choice for big media companies looking for online distribution has attracted another equity partner: Disney.
The Walt Disney Company has announced a deal that sees Disney taking a 27% stake in Hulu and receiving 3 seats on Hulu's board. Hulu is now owned by Disney, News Corp., NBC Universal and a private equity firm.
Hulu broke into the top-three most watched video sites in March, with 380 million videos viewed, thus capturing 2.6 percent of the U.S. market.
comScore Video Metrix finds users in the USA viewed 14.5 billion videos online in March, an 11 percent increase over February.
Google sites remain the top video destinations in the country, with 5.9 billion videos viewed (40.9 percent market share). In March, YouTube accounted for over 99 percent of all Google video viewed.
Web video is hot. From the user-generated video content on YouTube to the professional video content on Hulu, everybody loves watching video online.
But achieving real success financially with online video has proven to be much more difficult than achieving popularity.