Tuesday, 5 July 2011

News : More and more media budgets going to online video properties aggregators

By TodSacerdoti, CEO BrightRoll

Among the 28 million online video consumers in America, it is fascinating that only 5 content producers have an online audience of more than one million unique viewers. 

In fact, five of the top 10 largest online video properties produce no content at all and, if the U.K. follows a similar path to the U.S. market, by the end of this year aggregators will dominate the online video advertising charts.

As aggregators surpass individual publishers in reach and stream volume, it inevitably leads to one thing – more and more media budgets going to aggregators. 

We have seen this story before in display advertising, where aggregators initially represented only 5-10 percent of display dollars.  Today, as aggregators completely dominate individual publishers in nearly every measurable metric (reach, volume, etc.) and bring meaningful technology to the table (targeting, optimization, etc), they now represent nearly 40 percent of all display spend.

So, what makes content less king in online video than in television?

Content producers

First, on television, there is much less competition for your attention and the incumbents have 50+ years of experience in maximizing the value of the attention they get.  Content producers know that moving their content online only accelerates the inevitable – that they will make less money from their content, they will have less control of their audience and that their audience will fragment over time.   If content were truly king, it would hold its power in every medium.

Second, video content is expensive to produce and there are more efficient and sophisticated ways of aggregating audiences online.  People often forget that content producers are not really in the video content business – they are in the video ad business!  If they could sell video ads without producing any content they would, the content is purely the honey for the advertiser.  Well, in online video there are a lot of ways to monetize free content with video ads and that content doesn’t have to be “a million pound per show” television content.  It can be short form video, made for web video or other forms of content such as radio, games or social.

Lastly, web consumers prefer to consume content in short bites – Twitter feeds, Facebook updates, headlines or clips.  Traditional media companies’ core product, the long-form television show, just isn’t as relevant to the online consumer.  Outside of live sports, the traditional model of television content doesn’t translate cleanly.  As a result, the content producers are just simply losing their audiences to wide swath of Internet properties that can be aggregated by third parties at a massive scale. 

It is only a matter of time before the aggregators are 2x, 5x or even 10x larger than the traditional content producers.  However, as we know, media budgets follow audiences in the end but it often takes years of time.  My bet is that by the end of 2011 aggregators will be at least 15 percent of total spend and by the end of 2013 that figure will be over 30 percent.
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