Web Talent Tests Ads

Video Creators Seek Bigger Share of Revenue

By Daisy Whitney

Looking to increase revenues, a number of online video creators are turning to new ad strategies, including product placement.

When Perez Hilton revealed last month that he had made only $5,000 on more than 25 million video views on YouTube in the fall, his disclosure underscored a fundamental problem online video creators face today.

YouTube may be the fastest path to eyeballs, but most creators aren’t making much ad revenue on the world’s biggest video-sharing site. Some are not part of the site’s partner program that lets creators share in ad revenue; others, like Mr. Hilton, are unhappy with the returns.

Besides product placement, some video online creators are focusing on selling ads on their own Web sites and promoting that site as the preferred viewing destination. Also, technology firms such as Blip’d and Blinkx are introducing technology solutions that let ads travel with video around the Web.

They are doing this because most video bloggers have learned that while some fans may watch a Web show at the home site, most viewers watch Web shows on YouTube, MySpace or Facebook. But the ads don’t always travel to those sites.

Product placement ensures an ad is married to the video. Recent examples include YouTube star Tay Zonday’s “Cherry Chocolate Rain” video, produced in conjunction with Cherry Chocolate Diet Dr. Pepper; Hayden Black’s “Abigail’s X-Rated Teen Diary,” which featured a Warner Home Video DVD; and comedy duo Rhett and Link’s “Cornhole Song,” sponsored by AJJ Cornhole, maker of the Cornhole backyard game.

These are among the solutions Web video creators are testing as they aim to capture some of the $1.4 billion in ad spending that is expected to flow to online video this year, according to eMarketer. That number will rise to $4.3 billion in 2011, eMarketer says.

Rhett McLaughlin and Link Neal, former stars of the short-lived CW show “Online Nation,” now host a live Web show and produce comedic viral videos. Late last year, the pair struck a sponsorship deal with Ohio-based AJJ Cornhole to create a music video about the Cornhole game, a backyard game that’s a mix of Hacky Sack and beanbag tossing.

The video has been viewed more than 100,000 times on YouTube since its release in early December. AJJ Cornhole paid for the placement on a CPM basis. Mr. McLaughlin and Mr. Neal declined to disclose the rate, but said it’s similar to what YouTube pays. The pair recently joined YouTube’s partner program and said they are expecting CPMs in the range of $5 to $20.

“Our main mission was to get the name Cornhole out there,” said Adam Brinkman, managing partner with AJJ Cornhole. The company sells the game solely online and devotes all its marketing efforts to the Internet.

Mr. Neal and Mr. McLaughlin plan to explore more opportunities for “targeted strategic ads,” especially since 95% of their views come from YouTube.

Rising online video star Hayden Black, who fronts both “Goodnight Burbank” and “Abigail’s X-Rated Teen Diary,” said he integrated Warner Home Video’s straight-to-DVD movie “Return to the House on Haunted Hill” into the first episode of his show.

In the episode, Mr. Black’s character, Abigail, appears under the covers, holding a flashlight, having just been scared by the slasher flick.

Warner Home Video declined to comment on the deal, but Mr. Black said he sold the Warner placement for an upfront fee and a CPM rate for the month of October. The episode in question, “Dr. Slasher,” has been viewed more than 170,000 times, Black said.

Online entertainment network No Good TV also has embraced the integration model and monetizes video with ads on its site as a YouTube partner and via brand integration. No Good TV recently featured a candy-apple red Baldwin piano provided by instrument maker Gibson in its clips.

Parlaying Fame
Then there’s Tay Zonday, the YouTube star who rocketed to viral fame when his “Chocolate Rain” video logged more than 13 million views last year. He found a way to make money with his encore when he partnered with Cadbury Schweppes Americas Beverages to create the “Cherry Chocolate Rain” video, a sexy, hip-hop music video that features the new Cherry Chocolate Diet Dr. Pepper drink. In the song he sings that he was paid a “hefty fee” for the sponsorship. The video has generated more than 2.5 million views on YouTube.

Product placement in viral video lets advertisers reach younger demos. “The ‘Cherry Chocolate Rain’ viral video was just one part of the biggest media plan ever for Diet Dr. Pepper, which began Jan. 1 and features TV, print, online, radio and outdoor advertising,” said Jaxie Alt, director of marketing for Dr. Pepper, Cadbury Schweppes Americas Beverages. “Viral videos are another way to really engage and interact with our consumers, making our brands part of pop culture and keeping them top of mind.”

Mr. Zonday also is part of the YouTube partner program, along with Lonelygirl15, Smosh and Rhett and Link. “The YouTube partner program is the program we set up so that user partners can generate revenue from their content,” said a YouTube representative.

But some of the most popular video stars, such as “Ask a Ninja,” have chosen not to participate in the YouTube partner program. “There is more control and we get a much better deal on our own site,” said Kent Nichols, one of the co-creators of the Web show. “We do more than $20 CPMs on our own site.”

YouTube declined to disclose its ad rates.

Askaninja.com has garnered more than 70 million views across its site, iTunes and YouTube since its 2006 launch, but more than 70% of those views come from Askaninja. com or iTunes, where the creators serve ads they have sold.

“Ask a Ninja” rotates new advertisers, such as Doritos and Intel, into each weekly episode. If fans upload the videos to YouTube, the ads aren’t included, because of technological constraints and YouTube’s user agreement. YouTube forbids “the sale of advertising” without its written authorization.

Branding Pays
That’s why the “Ask a Ninja” creators focused on building their own brand. “We always said, come to askaninja.com. We never said, come to our YouTube channel or MySpace page,” Mr. Nichols said.

Geek Entertainment TV has employed a similar tactic by keeping its content primarily on blip.tv, where it can insert and change pre-roll and post-roll ads, said Eddie Codel, producer of the show.

Reporter Daryn Kagan uses Internet TV technology firm Brightcove and ad network Broadband Enterprises for her news reports on Darynkagan.com. That combo lets ads travel with the report if someone emails the video.

Blip.tv encourages its creators to maximize their revenues via syndication deals the video-sharing site has struck with AOL Video, Yahoo Video and iTunes, said Dina Kaplan, chief operating officer for Blip.tv. The video service also has developed a widget for Facebook so that ads live with the content when Blip.tv shows are viewed on Facebook.

“This is the new model, to have ads served no matter where the video is viewed. It’s a nice feature now and will be essential by the end of 2008 and going forward,” Ms. Kaplan said.
Revver pairs ads with content for video that lives on its site and is embedded on blogs and third-
party sites, such as “Abigail’s X-Rated Teen Diary” at abigailsxrated teendiary.com. But those ads can’t stay with the content when it’s uploaded to YouTube or MySpace, said Angela Gyetvan, VP of marketing and content at Revver.

She advises Revver creators to use YouTube for promotional content that drives viewers back to the show’s home site. Revver also is testing technology with tech firms that would pair relevant content with targeted ads.

Blinkx, Pluggd and Digitalsmiths are among the technology firms that offer video ad targeting. The Blinkx “Ad Hoc” program matches video with ads. Ads can be matched with YouTube videos embedded on other sites, but not on YouTube itself, Blinkx said.

There’s also Blip’d, a new technology service that purports to let users embed ads, widgets or links into their videos so the ads live with the video as it travels virally. Blip’d does this by creating a new file users can upload to video sites.

However, that technology may run afoul of YouTube’s user agreement.