Online Video Advertising: What's Wrong With This Picture?
Raúl Martin of Lisbon’s www.centralmusical.com spoke to me at some length about his experience providing sponsored concert webcasts to multiple platforms at www.nokia.pt/onlive. The site has a contract with an ad agency for a 50-50 split. In the past year, this agency has failed to turn up any campaigns at all. But when Martin successfully sold a campaign himself on three separate occasions, the agency came in for their 50%. He wasn’t bitter; in fact, he was quite philosophic, saying the problem was that the agencies just don’t understand the medium the way the technologists do. And he did feel they were learning fast. Some interesting metrics from Martin: Nokia OnLive gets up to 9,000 video plays each day, most lasting 17 minutes over five videos. The site grossed about €10,000 (about $14,180 U.S.) from ad revenues in a little over a year of operations.
In Martin’s own words: “So we don’t make money on ads: we make it by doing everything else apart from design. They do their own YouTube central musical; use our infrastructure, database, back office and our ad system. They supply look and feel, and we charge a license. We charge for licensing of concerts; it’s cheaper to licence the content than produce it. We then additionally produce 12 live concerts per year for Nokia. We produce for web and mobile, live and on-demand. When these videos are embedded anywhere else (blogs, etc.), the preroll is Nokia’s, as is the player. http://www.centralmusical.com/nokia/player.php.”
So while there was revenue and, therefore, something of a validation that the advertising model could work, the reader should be reminded that this was a rare example. And by that I mean it was the only example available at the time I was compiling this article.
A New Hope
Pulling my hair out trying to find anyone living off of ad revenues alone, I spoke to a few members of the public relations team at Global-MIX. I asked them if they knew any ad agencies or other organisations that were making profitable revenues from advertising. After a week of searching, they came up with two more examples: Jambo Media, LLC and Film Annex.
Figure 3. Film Annex is now delivering 150,000 films to 100,000 unique IP addresses every month, each with a preroll. The site brings in sufficient revenue to keep the project onlinen and funded during the time it takes to convince filmmakers to release their movies through the service.Robert Manoff, CEO of Jambo Media, is enthusiastic about his model, in which publishers share in the ad revenue generated. The Jambo Media Player is provided to anyone who licenses his or her content to Jambo, which then provides video feeds to the players (for example, celebrity news and gossip) on hundreds of news portals and gossip magazine sites. In effect, Jambo aggregates the eyeballs watching hundreds of websites and then splits the ad revenue with the video producer/provider.
This works well for portals where the addition of video is a “nice to have,” and there are certainly many such sites. Jambo is doing good things, and the limit for the company is probably about ensuring that it is licensing video people want to watch in large-enough volumes. Jambo is doing a great job of it, though, with 3 million daily plays (65% in the U.S.) that lead to significant daily revenue.
Francesco Rulli of Film Annex presented probably the most clear-cut example of the model I now believe is emerging in the sector. The company is an ultrasmall, ultralightweight business that can provide a livelihood for two brothers through the delivery of a vast number of long-form films hosted for internet delivery with a tied preroll. The filmmakers sell DVDs and other merchandise on www.filmannex.com and take 100% of the proceeds; the site’s services even cover the credit card/ ecommerce costs of such transactions. In exchange, there is a reasonable-quality Flash stream of a filmmaker’s movie hosted on the service with rights to add a preroll when played.
Film Annex has made deals with hundreds of filmmakers who produce foreign language films (the target market is currently the U.S., but the site also has a reasonable amount of success elsewhere) and special interest films, such as documentaries covering history, technology, and more. By being highly classified with the media channels, the advertisers can get a better idea of the exact demographic watching each film. This makes it much easier to sell campaigns because they can be attached to film genres relatively easily.
Film Annex is now delivering 150,000 films to 100,000 unique IP addresses every month, each with a preroll. The site brings in sufficient revenue to keep the project online and funded during the time it takes to convince filmmakers to release their movies through the service. Film Annex’s founders seem to be aggressively taking on a neat opportunity. They have actually managed to fund their business within its means from its own revenues. It is clearly a sustainable business that services a huge community and skims just enough from the advertising to sustain all parts. Everyone wins. That’s a good example of a balanced ecosystem.
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