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Three Second Pre-Rolls On YouTube?
I went through a period where I wrote about YouTube a lot. It was fascinating to me to watch web video take off and the lessons we all learned from YouTube's success were important. After YouTube was purchased by Google, I kind of lost interest. I felt like that story had played out to its logical conclusion and it was time to look elsewhere for lessons to learn.
But I am taken back to YouTube after watching this video of Chad Hurley that Jeff Jarvis took at Davos and posted on YouTube (of course).
What Chad it talking about it a monetization system for YouTube, which apparently will include three second pre-rolls. More on that later. Chad first talks about digital fingerprinting which is similar to the technology that Snocap uses and how it can be used to let content owners to "claim" their content. And when that content is used in a mashup, they can share in the revenue. That's exactly how this emerging model of content creation/consumption should work.But of course, there needs to be revenue to share with the content owners and the content creators (the people creating stuff on YouTube). And that's where the monetization system comes in. To date, YouTube has relied on banners to provide revenue.
But it appears that they are going to offer video ads directly in the player. That's what most traditional media companies have been doing, mostly via pre-rolls. Pre-rolls are a questionable monetization system for YouTube like web video. But keeping them to three seconds is certainly an interesting idea. It's hard to object to three seconds. But the question is how much is an advertiser going to pay for a three second insertion?
Anyway, I like the way that YouTube waited for the community and service to develop before locking into a monetization and compensation system. To date, they've showed a good feel for what will work in this emerging medium. We will soon see if they have a similar feel for how to monetize and compensate everyone in the ecosystem. As always, I am rooting for them.
January 27, 2007 Venture Capital and Technology | Comments (11)
Comments
I would be willing to pay $0.05 per impression (aka play). I don't remember exactly how many "plays" occur on YouTube per day, but I believe it's something like 100M. If you figure each of those plays generates $0.05 (and you're able to find enough advertisers at that rate), you're talking $5M per day in revenue...
YouTube can monetize in a BIG way if they wanted to... Google will definitely be making a ROI.
Posted by: Robert Dewey | Jan 27, 2007 4:42:03 PM
What will also be interesting to see is if they include revenue sharing for referral. If a blog, news site, forum poster, digger, etc. could make a dime or two from referring people to a video then it could increase a video's/YouTube's viral properties.
Posted by: Richard Giles | Jan 27, 2007 9:43:35 PM
This will be a great monetization story.
But Since it will most probably be CPM and not CPC, i doubt if it will grow the way adwords has, for example.
Posted by: DrDoubt | Jan 28, 2007 4:28:31 AM
It's great to see YouTube focusing on driving revenues. MySpace's success in monetising it's traffic has been great for the sector and it would really help if YouTube does the same.
In addition to your comments I was struck by the thought that it will be really complicated to figure out how the revenue should be shared using their audio finger printing technology. Different songs in there for different lengths of time for example, and different rights owners may want different rates for different tracks.
I will also watch how this plays out with interest.
Posted by: Nic Brisbourne | Jan 28, 2007 8:30:54 AM
A thinly disguised "I told you so"?
Posted by: jackson | Jan 28, 2007 10:31:19 AM
One aspect not getting enough play is that this also creates a better monetization platform for the traditional media giants. I think it is their requirements that will drive the ultimate parameters of this platform.
Posted by: galeal | Jan 28, 2007 12:46:39 PM
Nice article Fred. Agree that they appear to be letting monetization bubble up from rather than trying to force a solution. However I'm skeptical of video as a good ad medium.
Many TV ads persist not because they actually result in ROI, but because they are perceived to work. Online video is going to *prove* that the video advertising emperor has no clothes, though advertisers may remain too ignorant to act on that information.
Posted by: Joseph Hunkins | Joe Duck | Jan 28, 2007 12:47:47 PM
3 second ads? sounds like we have at last arrived "20 Minutes Into The Future" and no have blipverts:
http://en.wikipedia.org/wiki/Blipvert
Posted by: steve | Jan 28, 2007 1:41:06 PM
Robert, $0.05/impression is $50 CPM, i dont think even the premium priced superbowl ads go for that rate ($2.4 million for super bowl ad spot which attracts 80 million viewers is $30 CPM)...
Said these i think youtube can move 20-30% of their inventory at $10-12 CPM to brand advertisers (assuming they can sell the internet video story sucessfully to madison av). Offcourse the remaining 70-80% remnant inventory will go dirt cheap for something like $1 cpm or something!.
Posted by: Gopi | Jan 28, 2007 6:11:16 PM
Sorry for being naive, but what marketer would imagine that a three second advert could have any meaningful impact on the viewer? Even if you get over that hurdle, doesn't it seem likely that viewers will learn to tune them out just as eye-tracking studies show have begun to happen with the right-hand column of web pages?
Posted by: John Dodds | Jan 29, 2007 4:57:36 PM
Don't trivialize the difficulty regarding the accurate/robust identification of copyright holders. Right now they are talking about "audio fingerprinting" for background copyrighted music. That's a far, far easier problem to solve than trying to identify copyrighted video in a general sense.
Posted by: Chris Dodge | Jan 30, 2007 11:20:23 AM
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