Video sites are ready to make money. That's the recurring theme at Streaming Media West, an online video conference in San Jose, Calif.
While ABC, NBC and Fox have all embraced the internet with an almost freakish enthusiasm, the online video ad market is puny compared to television, and frustration with the monetization problem is palpable.
"People are spending more time online but advertisers are not flocking to it at the same rate," said Jordan Hoffner, director of content partnerships at YouTube. "People want monetization . . the time is here, why isn't it coming?"
The problems with online video are not insignificant. Advertisers are reluctant to buy ads against user-generated content for fear that it could tarnish a brand; there still isn't a standard metric used to count web traffic; and many viewers expect fewer or less obtrusive ads in online videos than they might tolerate on TV.
More than a couple people at Streaming Media West cited NBC's
(mis)adventures with the Olympics online as an example of how online video fails broadcasters. The GE-owned network generated an estimated
$6 million in revenue from online videos of the Olympics, according to eMarketer, while it reportedly generated hundreds of millions in revenue from traditional television advertising.
But it isn't a good example, says David Hallerman, senior analyst at eMarketer.
"I don't think the Olympics was a disaster for NBC," says Hallerman.
"For the number of minutes [NBC] streamed, it didn't do badly. If there were as many minutes [of Olympic programming] streamed online as there were in total TV time, NBC might have made $1.41 billion in internet revenue.
NBC consciously chose to limit the amount of programming available by making it only watchable on Microsoft's Silverlight player; and by delaying the online availability of some of the most popular events, according to Hallerman.
Still, NBC streamed one of the most widely watched events online of the year , and if it couldn't maximize profits on it, who can?
Some people suspect that until the ad market catches up, content providers will look at ways to cut costs in order to make online video more profitable.
"We all know video is here. But I don't think monetization is growing fast enough. I think future innovations will be about helping content providers reduce the costs," says John Furrier, vice president of U.S. operations for PPLive, a Chinese P2P television streaming software maker. "I think we'll see more efficiencies in content delivery."
And for all the monetization problems, the business is still growing nicely, says Tad Davis, vice president of marketing and creative services at Tremor Media, an online video ad network.
"We're seeing huge movement from brand advertisers online," says
Davis. "I'll tell you what advertisers don't like -- user-generated content. They don't want their brand beside questionable content. But is it a problem that ad money isn't moving online fast enough? We're seeing an exploding online video ad market. Whether we're growing 80
percent or 50 percent for the year, it's still good growth."
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