In Depth

Column: A Silver Lining for Web TV

The thing I love about research reports is that there’s a new one every week. And this week’s installment is of the shiny, happy variety. (That’s a change of pace because I know many of you said you were ready to retire after the bleak Lehman Brothers report from earlier this month.)

So here’s your good news. There is money to be made in professionally produced online video and the prices based on cost-per-thousand (CPM) impressions are good. That’s the conclusion of a report from the Diffusion Group.

Professional Web programming yields very high CPMs, the report found. The CPMs for long-form online content are $40 today and will reach nearly $46 in 2013. Meanwhile, CPMs for short clips are clocking in at about $30 and will rise to a little over $34 in five years.

The CPMs for user-generated video will have the smallest rise, from only $15 today to about $17 in 2013.

Frankly, I’m surprised there is any money going into user-generated videos. After all, it’s pretty much a given that advertisers don’t want to back videos of cats flushing the toilet or girls hula hooping in their underwear (But maybe they should. Really, what would be so wrong with Charmin sponsoring the former and Victoria’s Secret the latter?)

Still, let’s consider the sorry state of user-generated videos. They account for about half of the online video streams we’re watching today (and in 2013), but they will only ever yield about 4% of all online video ad revenue.

The lion’s share of ad dollars—$590 million today and $10 billion in 2013—will go to the professional stuff. That can be anything from ABC.com to Revision3 to video bloggers. Because that type of Web programming accounts for 96% of ad revenue flowing into online video.

And that’s why, the report concludes, now is actually a good time to be an Internet TV programmer—because the rate you can charge for professional content is quite high.