IDC forecasts that the market will grow sevenfold by 2012, hitting $3.8 billion domestically. And the growth isn't completely tied to major media companies; the Kelsey Group projects the local video ad market—supported in large part by small and medium-sized businesses—will reach $1.5 billion by the end of 2012. With those numbers as our backdrop, let's take a look at some of the things your company should be considering when it comes to monetizing your online video.
Make Money Everywhere
Existing Web sites that incorporate video see lower bounce rates, higher levels of engagement, and more repeat traffic. This increases the value of the non-video portion of the site, driving up eCPMs for more traditional display advertising. Kidzbop.com, a community site for children, added a video offering and saw their bounce rate fall from 35% to under 20% and engagement tick up from four minutes to 10. As a result, revenue numbers have increased across the non-video components of the site and advertiser interest has continued to grow.
Find a Sponsor
Offering sponsorships of the player, a series of videos, or perhaps even of the entire video experience can be a compelling option for a brand advertiser. Seagate, the storage company, was a long-time sponsor of noted blogger Robert Scoble. When Scoble joined FastCompany.tv and launched ScobelizerTV, Seagate agreed to sponsor the first year. While the sponsorship is strongly tied to the video offering, it includes cross-promotion in print, at events, and elsewhere on the site. The model has worked well thus far as FastCompany.tv is in talks with other companies about sponsoring other shows.
Focus, Focus, Focus
If content is tied to a specific vertical, then advertisers feel confident that their ads are well-targeted to the audience that they want to reach. Into Productions is a start-up company that is targeting demographically desirable niche communities. The first few sites that they launched focus on aviation enthusiasts, equestrian fans, and classical music aficionados. Those who elect to advertise on any one of these sites will do so knowing that they can really pinpoint their audience.
Balance Monetization and User Experience
As a general rule, the more intrusive the advertisement, the higher the eCPM will be. Although the temptation might be to put pre-roll ads before every video, you might will probably find that mixing pre-roll with post-roll and overlay ads makes for a more engaging experience for your users. For companies that are already using an ad server, Panache's Universal Media acceptor allows them to leverage their pre-existing ad infrastructure and create compelling ad campaigns that blend various ad and asset types. Sites that don't have an ad solution in place can turn to a solution like Liverail, which allows for campaigns that leverage a mix of pre/mid/post-roll and overlay advertising.
Ad Networks to the Rescue
You might want to hold off on the retirement property, but you can monetize user-generated video via ad networks. Working with an ad partner like adap.tv—a network of networks—is a turnkey way to acquire advertising for user-generated content and can also serve as backfill for premium content.
If you don't have ad sales resources in-house, consider partnering with a company that can sell some percentage of your inventory on a revenue-sharinge basis. For example, Tremor Media offers both an advertising technology and sales solution called – intuitively enough – the Acudeo Video Monetization Platform. Once a site has integrated the Tremor ad components, it's quite simple for Tremor to start placing ads into the videos that co-mingle with your own.
Bring It In, Send It Out
There is no rule that dictates that your site should only contain your content. If follows then that you might also want to allow other sites to avail themselves of your content. Video syndication offers two great benefits: it allows for promotion of your content outside the confines of your site and it gives you the ability to add compelling content to your own site. Companies like Mochila and ClipSyndicate allow companies to supplement their offerings with high-quality content...and get paid for doing so.
Create Great Content
The one rule that doesn't change is this: Content is king. The better your content and the more engaged your audience, the higher eCPMs will be for your videos.
Finally, it's critical to twiddle, tweak, and most importantly, be patient. The strides that have been made in monetizing online video have been substantial, but it's still very early in the game. You can take heart in reminding yourself of this one fact: like you, the "experts" are still just figuring it out.
Since founding Twistage in 2004, David Wadler has led the company's business development and strategy efforts. He has been instrumental in building the company into a significant player in the online video space with clients including The Canadian Broadcasting Corporation, PerezHilton.com, Fast Company TV, The New York Observer, Mochila, and more. Mr. Wadler has broad experience in the software world, ranging from start-ups to Fortune 500, on both the technical and business sides of organizations. Based in New York City, he is a graduate of Brown University and holds a degree in economics.