Edgy Draws Eyes, Not Ads

Aug 14, 2006  •  Post A Comment

Media agency MPG and its client Comedy Central made a bold but safe move last week into the red-hot world of user-generated content.

They placed a banner ad for Comedy Central’s upcoming William Shatner roast, “The Shat Hits the Fan,” on the Web site Newvoyages.com, which in September will debut a 53-minute nonprofit Internet TV version of “Star Trek” based on the characters from the original series.

Comedy Central’s gamble, as an advertiser in this case, is significant because it underscores what’s at stake in the business of Web video as media companies such as YouTube, Google, MSN, Yahoo and AOL jostle for pole position as online video portals.

While user-generated content has all the buzz, most of the top-ranked online video sites say their most popular content is not the edgy, catchy viral video stunts that have captured headlines, but rather music videos, movie trailers, sports highlights and news stories. Those types of videos have an important thing in common: They’re much easier to sell ads against.

Ad Dollars Crucial

Who will succeed in Web video is intrinsically tied to whether sites can attract ad dollars or partnerships from media companies. While user-generated content is trendy, it’s the toughest video area in which to make money. And that’s why Comedy Central and other advertisers are exploring it carefully. The ad for the upcoming roast runs in a controlled environment along with like-minded content that’s semiprofessionally produced, rather than in viral videos that skirt the edges of propriety.

“The keys to the kingdom are still in California,” said T.S. Kelly, VP and director of research and insight for Media Contacts, the interactive arm of media agency MPG, which counts Comedy Central as a client. “The most well-produced content is still the most popular.” Advertisers aren’t ready yet to hang all the way out at the tip of the proverbial long tail and sponsor clips of squirrels on water skis or a family birthday party, for instance.

Though the floodgates are now open for anyone to create and watch videos, the ones that percolate to the top are still usually the slickest, best-produced material. “Advertisers need some degree of control,” Mr. Kelly said. “We felt this was a nice middle ground.”

That middle ground for now is the “torso”-neither the head nor the long tail of content, but the well-made stuff in the middle, said David Eun, VP of content partnerships for Google. “It’s the torso of professionally produced content that attracts top advertisers,” he said.

That could be clips from PBS or from museums and academic institutions, he said. In other cases, the most popular content is closer to the head. News clips from MSNBC and NBC play well on MSN, while music videos are tops for both Yahoo and AOL.

Yahoo Video launched in 2004, and Yahoo expects to serve 5 billion streams of music video this year, up from 4 billion last year across Yahoo Music and Yahoo Video, said Jeff Karnes, director of multimedia search for Yahoo.

Later this year, Yahoo Video plans to begin offering pre-roll ads in front of its video content so it can tap into the projected 2006 online video ad revenue of $385 million, a figure that may rise to as much as $640 million in 2007, according to new media research firm eMarketer.

Yahoo already runs graphic and banner ads from blue-chip advertisers on Yahoo Video. Though Yahoo began offering user-generated videos in late May, for now advertisers are ponying up for content that’s safer. Mr. Karnes added that placing ads in front of traditional content is just that: traditional. Advertising in user-generated content is unknown but still worth pursuing, he added.

Like Yahoo, AOL Video counts music videos as its most popular category. In June, AOL Music claimed 19 million unique visitors, according to Comscore numbers provided by AOL. The portal offers more than 10,000 music videos. They’re popular because they’re short, available easily from artists who want promotion and fit the demographics for younger Web video audiences, said Fred McIntyre, VP of AOL Video, whose advertisers include Procter & Gamble, Kraft, General Motors, Intel, Unilever and Progressive Insurance.

In time, Mr. McIntyre expects TV programming to be one of the most popular online video categories. TV content has risen in popularity this year and now ranks in the realm of movie trailers in usage, he said.

Like Yahoo and Google, AOL is stepping into user-generated content with its beta test of “UnCut Videos.”

“You are certainly seeing phenomenal growth around user-generated stuff, and there is a whole dynamic there,” Mr. McIntyre said. “But it is tougher to make money in that area. If you go and you talk to the guys buying ads for Procter and Gamble, they won’t be as excited about buying that as they are about buying music videos or news or TV programming. There are just some real risks for their brand.”

Across the Board

That’s why Google Video, for instance, is also placing its bet on comprehensiveness by offering user-generated videos, niche content, music videos and broadcast network shows. While the service hasn’t been a smashing success, the search giant has experimented with a variety of business plans, such as download to own, pay-to-play, ad-supported and syndication via a deal it inked with MTV Networks last week to distribute clips across nearly 300 Web sites.

“We have evolved from having one monetization option to expanding that,” Mr. Eun said. “We see ourselves as a technology partner for content owners … When you look at the consumption curve, it’s extremely flat and extremely long.”

The early success the Internet pioneers like AOL, Google and Yahoo are finding with advertisers and business models speaks to what matters most with online video-having the best business plan.

As for YouTube, its task is to turn the eyeballs it attracts into ad dollars. The business model for user-generated content lies in finding a filter so advertisers can decide whether to put a 30-second video around a two-minute clip or not, said Josh Martin, digital media analyst with iHollywood Forum.

YouTube did not respond to a request for comment.

Last month YouTube said it planned to introduce a new ad system later this year encompassing advertising, promotions, sponsorships, ads related to content on the site, and banner ads.

In yet another indication of the promise held by Web video, Viacom’s MTV_Networks late last week agreed to acquire Atom Entertainment, which owns two Internet film and video sites, AtomFilms.com and AddictingFilms.com.