This new business has some heft behind it-including Google, MTV Networks, NBC Universal, Yahoo and CBS TV stations.
While advertisers are eager to peddle their wares via new-media video, there's been a dearth of high-quality video to sponsor. Syndication holds great promise to solve that problem by populating far-flung websites with more video for big-brand advertisers to buy.
Syndication is like turning on a fire hose. It opens up vast amounts of video content to countless websites. "Online-video syndication is a mechanism to distribute video to the nooks and crannies of the internet," says Will Richmond, president of research company Broadband Directions.
Researcher eMarketer predicts online-video ad spending will grow 89% this year to nearly $775 million. It should grow to $2 billion in 2009.
Producers and networks are looking to distribute existing shows or new material on cellphones, iPods, video-on-demand or online. Bennett Media Worldwide now offers its guy-centric shows, which range from "Bikini Destinations" to the new "Girls Fight Club," on online venues such as Google Video, Veoh Networks and Guba.com. New-media distribution company Digital Music Group is aiming to be the middleman for media companies that want to bring their video to iTunes, Google Video and other online outlets.
Consumers are ready. Consumption of internet video exploded last year. In August, U.S. internet users initiated nearly 7 billion video streams, with the average streamer consuming about two videos each day, according to the most recent data from audience-measurement service ComScore.
Traditional syndication involves studios selling shows to TV stations or cable networks, and online syndication has the same principle at its core-distribution of programming. But online-video syndication doesn't follow the old-school studio-to-TV-station path. It's a much more fluid marketplace in which TV stations can become content purveyors and websites can be distributors, and vice versa. A variety of business models are possible.
"You could almost say TV syndication has been point to multipoint whereas online is multipoint to multipoint," Mr. Richmond says. "There are no set rules for how this marketplace should operate."
Online-video syndication is simply the next extension of the syndication business in general, says Kim Malone, Google's director of AdSense online sales and operations. First there were TV stations, then cable networks and now websites, she says, adding, "It's just a whole bunch more channels for the content to be distributed on."
In NBC's new venture, the National Broadband Co., both web-video providers and web publishers sign up and then pick and choose from each other the videos they want to offer and the videos they want to carry. NBC sells the ads and splits the revenue.
In the Google-MTV Networks deal, Google distributes MTV video to smaller websites in its existing AdSense network of sites. Text ads are placed next to relevant content on websites that join the network. Google shares the dollars with MTV and the websites. In the CBS-Yahoo agreement, the CBS owned-and-operated stations supply news video to Yahoo, which sells the ads and splits the revenue. Smaller companies such as Broadband Enterprises and internet TV start-up Brightcove have also struck deals to distribute video content to various websites.
Online syndication "makes sense for brand-based advertisers to extend their reach and move into a platform that's new and emerging and hugely on the rise," says Michael Hayes, senior VP-managing director, interactive, at Initiative North America, Los Angeles.
So far, the advertisers for these ventures have primarily been brand marketers in categories such as consumer package-goods, automotive and financial services. National Broadband Co. launched last fall with about 25 web partners and two advertisers. By year-end it had expanded to nearly 200 web partners, such as Break.com, E! and ManiaTV, according to Brian Buchwald, NBBC general manager. There were four advertisers: Procter & Gamble Co. for Olay, Pantene and Swiffer; JPMorgan Chase; Sheraton hotels; and Toyota Motor Sales USA.
NBBC delivered 100% of the impressions that charter advertisers JPMorgan Chase and P&G bought in the fall, Mr. Buchwald says.
That's because syndication is designed to be hyperefficient, pulling in the smaller ad opportunities that can round out a buy.
This year, expect more involvement from direct-response advertisers, Ms. Malone says. Google will also strike more deals with additional TV networks and newspapers, especially those in its AdSense network. By reaching into its network of AdSense websites, Google can easily expand the reach of video and ads that reside with it throughout the web. "This is massive scale," Ms. Malone says.
For CBS, syndicating its local stations' news video followed the station group's efforts in the last few years to grow online revenue. Last year, the CBS O&Os' sites grew the number of video streams served and online revenue by as much as four times, says Jonathan Leess, president-general manager of the CBS Television Stations Digital Media Group.
"On the digital platforms, video syndication for a broad media outlet like ours allows us to reach niche audiences who don't necessarily frequent our local station broadcast or web portals for [relevant] content," he says.
CBS is testing syndication in other ways, too. CBS Corp.-owned CSTV Networks struck a deal for Broadband Enterprises to distribute college-sports clips from CSTV to its network of 1,700 website partners.
And with all this growth Mr. Hayes expects to see more sophisticated reporting, analytics and measurement tools.