Capitalizing on Online Video's Strengths

Medium Has Yet to Pan Out Financially, but There May Be a Solution

By Published on .

David Carson
David Carson
Everyone seems to be down YouTube's throat for not pulling its weight at Google. The television networks earn a pitiful 1% online of what they rake in from their broadcast outlets with the same videos. And the "me too" video sites are venture-capital money machines of the burning kind. Online video now boasts a bigger audience than cable television, but its $1 billion in ad dollars is a fraction of the $70 billion in broadcast wealth many assumed would be redistributed.

When will online video be the behemoth business everyone always crows about? Maybe when we quit treating its biggest strength as a weakness.

Old model won't fit
You see, online video is not TV. Sorry to state the obvious, but even though we all know it's a very different medium, we are trying to force-fit it with a television ad model. Publishers are trying to divert TV ad dollars to online video platforms and feel the need to use the same language and formats as TV. They do this thinking it will help them bridge the knowledge gap and convince TV media buyers to shift their dollars.

It's a critical error. The two media are so fundamentally different that making comparisons in format and language will eventually stunt the growth and impact of online video for creators and marketers alike.

Let me make a comparison. Imagine if Google's search business didn't include AdSense but marketers paid a CPM or flat fee to be listed within search results -- just like the Yellow Pages, or a newspaper. This does two things. First, it makes the search results unusable to users because it's placing paid-for hits above anything more relevant. Second, because the search is now not as useful, its future audience potential diminishes. We would have never experienced the incredible benefit that Google eventually provided to users and marketers. They could have easily gone down this road, but they didn't. They knew their medium was fundamentally different from print and used a new ad model that suited it better.

What's the big diff?
So what are the fundamental differences between TV and online video -- and what is the model?

People use them differently. TV attracts watchers, while online video attracts users. When I mention this to people, they always take issue with it. They say that people are, at the end of day, watching video. And I counter that just because TV and online video use moving images doesn't mean they're the same. It's like comparing Google to a magazine, or a newspaper: The fact that they all use words and paragraphs does make them similar in some ways, but they are obviously not the same. One major difference is how they're used.
David Carson is co-CEO and co-founder of Heavy, the parent company of entertainment site He is also co-CEO and co-Founder of Husky Media, Heavy's ad platform technology spinoff.

The internet's inherent strength is as a noisy feedback machine where billions of people can provide input, share, embed, create and sculpt their own video experiences. They become part of the experience, not simply observers -- not unlike the difference between TV and video games. You don't watch video games, you play them.

Televised video has different levels of quality, and so does online video. In each case, the quality is largely in the eye of the beholder, and with online video, the way that the clips are used adds another dimension for evaluation. Nonetheless, though I have seen expensive, professional video get smoked by a homemade video of a guy dancing at a high-school talent show, an advertiser is still more likely to prefer the expensive professional video than the one (er, many) that people actually watch, share, embed and comment on.

So why are we treating this inherent strength of the medium as a weakness? Even worse, why are we blindly accepting that the best way to build online-video markets is by applying an ad model from a completely different medium?

Overlooking the real strength
Because that's where marketers put their money. They see video on new boxes and think, "Hey, it's another place to put my video" and miss out on the real strength of the medium. Even worse, online-video companies feed this mentality by trying to showcase what the marketers think they want -- "quality content" -- and dismiss the entire feedback system that tells them what the users are actually doing.

People are not saying, "Gee, I like the idea of video on the Internet, but I'm not going to spend time with it until there is more quality content." The exact opposite is happening. Usage keeps growing as users find, consume, comment on, create and share videos by the billions. There is a value gap. The gap is between what people are actually doing and what advertisers think people should be watching. These two things are simply out of synch, and until we get them aligned, the market will putter along, with many lost opportunities.

People are moving to this new medium with or without the marketers' involvement -- that much is clear. The questions remaining to be answered are whether marketers will see the fundamental value and exploit it, and whether online-video companies will step up to the plate to get them there.
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