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Knowing when to bring video production in-house

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A month ago, Advertising Age launched a new product, a daily video news report called 3 Minute Ad Age. It had been in the works for close to a year, because that's how long it took to build enough infrastructure and expertise to get it off the ground.

This came on top of years of trial and error on earlier video efforts, going back to the Internet boom of the late 1990s. We tried everything from investing in satellite delivery of video direct to office PCs (at its nadir, this program had three full-time staffers serving video to five customers—a very bad model!) to simply buying other people's already-successful video sites. We began by hand-coding our own video platform, and then, as technology improved, moved to a commercial one (in our case, Brightcove). In Ad Age's case, given the importance of TV commercials to our business, and the number of TV industry advertisers we have, we have always felt it was imperative to have a video presence.

Out of that experience, I offer the following five lessons we learned the hard way:

1. Don't sweat the technical details. These days, issues of video platforms, video serving and video digitization are easily mastered or outsourced. There are many people happy to help at a reasonable price, depending on the scope of the work. Bandwidth is relatively cheap, many A/V shops will handle digitization, and there are platform companies competing for your business. I have seen magazines with small staffs, and even less technical expertise, package and post an entire video presentation within a few days.

2. When starting out, don't shy from outsourcing. Developing a partnership with a good production/editing company is crucial, particularly when starting out. Ad Age produces its video in tandem with an excellent New York-based video services company. They understand our needs, handle the setup at events or interviews and then take care of editing and digitizing. Until you're ready to build in a permanent staff and infrastructure, this is a much more manageable cost structure.

3. When do you best start producing video in-house? That's a tough question and too big a topic for this column, but the key take-away is this: If you're serious, do try to master the basics of video production. For $50,000 you can set up a satisfactory Web TV studio—lights, cameras, teleprompter, Macs for editing and whatever other bric-a-brac is needed. In-house expertise will also give you the ability to test and invent new video products, a very useful capability when brainstorming with potential sponsors. Daily one-minute shows, video news alerts or custom video all become cost-effective once you've made the initial investment. The downside of building an in-house operation? We'll get to that in point No. 5.

4. Talent is crucial. The temptation is always to use your own editorial staff. Resist that. It's TV, and we print people need to remember that. Every now and then a Web 2.0 media company will come along and start doing video and become an instant success. Behind that success, you'll inevitably find a smart, appealing anchor doing the on-air work. You should absorb this lesson: If people want to see your anchor, you've already won.

5. The downside: All these resources are expensive. Your operation has an outside production house, an in-house studio, talent fees, equipment to operate and maintain and, at a minimum, at least one or two dedicated Web multimedia editors. There needs to be a steady flow of revenue to pay for all this. Which brings us to finding advertisers. Every industry is different, everybody's customers are different. Some of them love the idea of buying Web TV ads. A lot of them don't. Smart publishers, obviously, will know generally how much potential there is in their market—and will build up their infrastructure accordingly. It's fun to just pump out a lot of video for the heck of it, but way more satisfying to make money doing it.

You have to accept that, in some industries, there may be no way to monetize video. In that case, the decision is whether some video content still serves your strategic needs or works well for your readers. But in many markets, video offers an opportunity to get at new money from old clients and attract new audiences. At Ad Age, where we do have interested sponsors, we put video advertising on our online rate card, and at a significant cost-per-thousand. This is the lesson here: If advertisers want it, they'll understand it's a premium-price product on a CPM basis.

David Klein is publishing and editorial director for the Ad Age Group, Television Week and BtoB. For more case studies and tips about building a video business, visit www.webvideoreports.com.

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