Monthly Archives: June 2009

Web Video – An Industry out of Balance

image (note, this entry is cross-posted over at my friend Jack Myers’ MediaBizBloggers site, where I’m now a regular columnist.  Enjoy!)

In the seminal 1982 movie Koyaanisqatsi, the life is portrayed as out of balance. These days, when I look at our online video industry, I can’t help thinking that we’re just as unbalanced as that movie – particularly when it comes to driving audience and traffic.

Much of the imbalance, I think, comes from trying to retrofit the web display model onto what is fundamentally a different medium, one that values a view much differently than a web visit.

To illustrate, let me lay out an example of what a problem I was trying to solve yesterday, and the obdurate obstacles I ran into.

We’re launching a new show in the next few weeks. And we’ve got a sponsor attached with the show launch, one that we’ve promised a certain number of video views. Now I know we’re going to hit it out of the park – but I want to prepare for the worst. So I did a little research into how I might be able to drive a little bit of paid traffic to our new show.

Here’s where it all falls down. Our show sponsor is paying us a very nice CPM – $80 – which is far above traditional pre-rolls and overlays. We’ll probably run those units as well, which could add a few dollars to the effective CPM– in a perfect world. Chances are, we’ll probably end up with an effective yield per view of somewhere around a dime – which translates into a $100 CPM.

From what I gather a $100 effective CPM per view is pretty amazing in today’s online video world. But what’s more amazing is how much I’d have to pay to deliver a non-organic viewer to the show.

Let’s say I wanted to use YouTube’s videosense product to drive a view. Well, their minimum bid is ten cents per click – or ten cents per view on an auto-play – which means I’d just break even every time someone watches – if I’m the only bidder.

So I looked out to others who promise to deliver qualified viewers. I had an interesting exchange with one company CEO – who will remain nameless — who promised to give me qualified viewers for .20 to .30 cents per view. The amazing thing, to me, was that his pricing was low, compared to some of the other options I researched.

Talk about out of balance. I’d be spending a quarter to get less than a dime. New media, new rules, fer sure. But until we unlock the secrets of transmutation, it’ll never be profitable to spend digital quarters to earn digital dimes.

But that just leads to yet another “out of balance” problem when it comes to buying video views. Because these are CPC deals, you pay when the click-through happens, not when a video is completely consumed. As we’ve seen, even with our committed viewers, there can be significant drop off in the first few seconds – that’s why we don’t count a view until the program has been completely delivered. And when it comes to clicking on an ad, that drop off can be upwards of 60-70%.

Not to worry, says the video industry, and legitimized by the IAB. If someone watches for 3 seconds, we consider that a “video view” – even if those viewers never actually see the advertising message embedded into the video.

When I tried to explain this to my CEO friend, this was his response.

“I see your point….but the pricing is what it is.  If you were to buy a CPM ad unit from YouTube or anyone else the effective cost per view would be (very) high.  We are buying CPM in bulk and arbitraging back to you on a cost per view basis.  Right now we are mostly selling to ad agencies that are pretty accustomed to buying media.  As we get smarter on buying views I’ll knowledge share with you.”

Wow, so you’ve been able to find ad agencies that are willing to buy video on a $200 to $300 CPM pricing for what is effectively three seconds of watching a video. I guess the greater fool theory still works when it comes to buying video views. But from where I sit, this is no way to build a business.

In the end, I just couldn’t see clear to paying quarters and making dimes. I’m comfortable with the numbers we’re promising, and if we run into any issues, I guess we’ll just do a make good. But at least my customer can be confident he’s getting what he paid for.

Oh, and if any of you agencies out there that are “pretty accustomed to buying media” want a better deal, drop me a line. I’ll sell you a far better placement and far better results for less than a dime that’ll outperform those quarters – any day of the week.

Twitter: CB-Radio, Zelig or Twech Support?

imageRemember Zelig?  Woody Allen’s classic movie depicted a human chameleon who had the uncanny ability to morph into anything you wanted him to be – and showed up everywhere.  That’s how I feel these days about twitter.

It’s a floor wax.  It’s a dessert topping.  It topples empires.  It enrages baseball managers.  It creates stars, and exposes idiocy. 

FWIW, I see two possible futures for twitter.  One side of me sees it as the CB Radio of the late ‘00s.

ASIDE: Don’t remember CB Radio?  At one point in the late 70s/these short-range two-way radios were all the rage, popularized by truckers but embraced by anyone with a car and a hankering for the open road – and a desire to avoid speeding tickets.  Mercifully, long-haul trucker culture sunk back into background noise, but for a while we were all Breaker-19, smokey and double nickels.  All you really need to know about the 70s is that it brought us Disco and CB Radio – a truly forgettable decade.  But I digress.

The other future – messaging or RSS for devices, people and places.  I’m fascinated by our local lunch/catering spot, Kitchenette SF, and how it twitters out each day’s lunch menu – along with how gourmet food trucks keep in touch with their fans.

But last night I discovered another great use for twitter: tech support.  I’ve been having trouble with WiFi interference at home, and I needed to see what hubs were broadcasting on which channels and where the problems lay.  I’ve used Netstumbler in the past for just this problem – but it doesn’t work on any of my modern WiFi cards.  After stumbling around in the dark, I decided to ask twitter.

imageWhat a good idea!  I got a bunch of great suggestions for products, tried a few of them out – and found that inSSIDer was actually the best of the bunch.  It’s freeware, has an intuitive interface and gave me just the information I was looking for.  Thanks to Nate_LapT and joelbarrett for the great recommendations.

So add in crowd-sourced tech support to everything else twitter can do.  Maybe we should call it “twech support”?  And thanks to everyone who reached out to help me. 

And follow me on twitter!  I’m jlouderb – and maybe I’ll help you out someday!

My New Business Blogger Series is Live

image So what have I learned over the last two years running Revision3 – a decided small company with big ambitions?  You can’t do it yourself.  If you really want to be successful you need a great team, and great advice from others who’ve been there, done that.

That’s why I’m so excited about this new video series we just launched, called “Insights from the Experts”.  As we put the five part series together, I got to sit down with five of the smartest folks advising small businesses today – and boy did I learn a lot.

It started with Peter Shankman.  You could dismiss him as a “PR guy”, but he’s so muc more than that.  I learned all about how to leverage the power of new social networking tools to really build and leverage social connections.

Ramon Ray and I had a great time talking about the mobile office, and how new software, hardware and services can keep you in touch wherever you are.

Being green is not just an alternative, it’s a path to profitability. That’s just one of the many things I learned sitting down with Anita Campbell, the editor of Small Business trends.

Riva Lesonsky gave me great tips on the people side of running a business, and how to focus on getting the most from your employees. 

And finally, James Gaskin got me to “Aaarggg” like a pirate.  If you want to know why, you’ll just have to watch!

Thanks to each of these five small business blogging experts for stopping by our Revision3 studios and teaching me about how to run a better business.  And thanks to HP, those conversations are now available online, in video – so you can learn more about these key business and technology strategies too!

Check out this great HP Insight series! Even if you’re not running a small business, you’ll enjoy the conversation.  And if you are, you’ll likely learn something to help your business grow!