Marrying Advertising and Content: The Future of Online Video Monetization

Posted by Oren Nauman on August 12th, 2014 at 9:20 am

Consumers are spending more time with online media content than they are with traditional forms of media, as digital usage now accounts for 57 percent of daily media time globally. It can only be assumed that this number is going to increase as video content continues to evolve. And with these changes, the entire online video industry is scrambling to figure out how to monetize this dynamic space.

In the past, various business models have been used to generate online video revenue, yet the space still remains widely fragmented. Viewer subscriptions, video-on-demand and authenticated TV experiences may have worked well in the past, but as the industry grows to new levels of complexity, these models will beginto encounter more serious competition. The same can be said for YouTube, who has led the trend of ad-sponsored videos. While this has been a viable option, viewers are now looking to engage with more personalized content. In turn, content owners are looking to maximize ad revenues by turning to data-based metrics to value impressions, and technology to solve problems of fraud, visibility and brand safety.

But if all these business models are no longer the best option for monetization, then what is?  It is a surprise to no one that the key to monetization is advertising. But, here is where things become interesting. Advertisers want metrics, completion, engagement and product lift. They also want brand safety and premium real-estate. Basically, advertisers want what they were promised—the best platform available and one that lets them connect with the perfect user. Advertisers want to engage with—and dare I say it—entertain, at the same time they are selling.  And they want all of this to be monitored, reported on and driven by data. This was re-enforced in Facebook’s recent quarterly earnings call: “Our goal is to make our ads as interesting and valuable as the organic content that you find on Facebook,” said Zuckerberg, Facebook’s founder and CEO”

So how does this all translate into a pot of gold for content owners? It’s in the connection between advertising and content. In the near future advertisers  will  have the opportunity to know exactly what piece of content follows their advertising, and in some cases, to choose an appropriate clip to extend the moment created by the ads. This content, carefully curated to enhance the advertising, will also match the user’s video consumption habits. All of this bundled together will provide substantial added value to the advertiser and translate into more revenue for the content owner.

While it’s easier said than done, there are data-based metrics that can make this correlation take place. Personalization fits into this programmatic equation because consumers are viewing increasingly hyper-focused streams of content. When they view these streams and the advertisers are using programmatic, the advertisement is in sync with the content, and thus the consumer is already intrigued and inclined to act. Ad action creates revenue, and with online content, that’s where most of the money is coming from.

But things really get interesting when you consider advertisers commitment to television advertising. And there is a commitment, considering brands paid $4 million for a 30-second spot during the 2014 Super Bowl. But is TV advertisement worth it from a revenue standpoint? Considering that 57% of media consumption is online now, it may actually make sense for brands to eventually move away from TV spots in favor of placing ads into better-targeted online content. Especially when most of online revenue is coming from advertising and advertisers can better deliver their message to the exact consumer as they watch their hyper-focused content.

Data-driven, programmatic advertising is quickly becoming the best option for online content with potential to completely disrupt the entire advertising industry. While advertisers may be getting by with other business models, they will eventually have to adapt to the increasingly personalized landscape or be left in the dust.

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