In the last year, AOL has made a definite point of focusing on video assets through the purchase of Studio Now, 5min and, most recently, GoViral. They have also made a number of high-profile content distribution agreements, most recently with Vuguru -- Michael Eisner's digital video production company. These deals are in line with last week's leaked editorial strategy document, which stated that CEO Tim Armstrong "wants video stories to go from being 4% of all stories produced to 70%." The message from AOL has been time and time again that the future is in video. (Disclosure -- I run a video company so clearly I agree with them.)
This is a compelling strategy given where digital ad spending is going. EMarketer predicts that digital spending on video will grow 38.6% this year while traditional display (banner ads) will grow only 11.4%. A study my company recently completed with Advertiser Perceptions indicated that 70% of all advertisers will increase their video ad spending in the next 12 months.
While one has to give credit to the Huffington Post for a lot of things, video is not one of them. ComScore indicates that the site had over 23 million unique visitors in December 2010, with over 3 million daily visitors -- great numbers, to be sure. All those users only consumed 1.3 million pieces of video content during the month -- an irrelevant number. With all their cachet, $37 million in funding and a stable of talented creators, they were unable to create a solution for video.
One could make an argument that AOL did not need to focus on video anymore given their other acquisitions, but that is also not true if you dig a bit deeper:
- Studio Now is a production entity with limited distribution.
- 5min is a content syndicator with decent distribution but it is all off-property.
- Go Viral is a viral content seeding firm – another syndicator. (Disclosure – GoViral is a partner of my company on occasion)
Most important, however, is that even with those acquisitions, AOL showed only 406 million content videos in December and just over 300 million if you take away the 5min syndicated videos. For perspective, Yahoo showed 477 million during that same time period (Break showed 102 million). AOL is a large player in the video space, but they are far from dominant and the Huffington Post is not going to help get them there.
I have been impressed with AOL's willingness to experiment during the past year and how it has approached the challenge of evolving that business. As any publisher can tell you, driving video streams and engagement is a difficult problem to solve. Given where both consumer and advertiser trends are headed, it would seem incumbent on most media companies to be spending time and money attempting to gain knowledge and strength on those fronts. That was where AOL seemed to be headed, but now the strategy is less clear.
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