Attic Rats, Preroll Ads & Show Your CPM

I was invited to join a web studio yesterday that provides a fixed CPM or cost per 1,000 views. That means the network promises you’ll earn no more and no less per video view… many of my friends have made that choice. It forced me to examine my current CPM and consider how that might change. Is it in my interest to accept a “floor/ceiling” amount? Or am I optimistic it will grow, and eager to benefit from that?

So today let’s look at attic rats, income for online-video ads, and contrast the sorry current state with what industry analysts predict.

Jim Louderback, CEO of Revision3, recently posted an intriguing article/rant about CPM prices… it’s titled “How Rats in the Attic Made Me Realize What’s Wrong With Prerolls.” Let’s examine the highlights to get a sense about why brands and online agencies have artificially depressed online-video advertising (despite shifts from print/TV to this medium).

Attic Rat

Problem (according to Louderback):

Unfortunately, even though those two video ad experiences are as different as rats and wine (KN note: Louderback was inspired having received junk mail for rat extermination and wine), they were probably priced at similar CPMs. That’s because the online video ad market – particularly the pre-roll market — hasn’t progressed nearly as far as print. Those were two markedly different experiences, with wildly different levels of engagement. However, for many buyers, agencies and brands an on-line video pre-roll is valued the same wherever it runs, regardless of viewer intent, ad placement and playback environment. It’s as if Trump and “Take Air USA” paid exactly the same for those two print placements – even though their impact is worlds apart.

Solution (according to Louderback):

If you’re a video ad buyer, understand the value differences between in-banner impressions and engaged in-stream video ads. Focus your energy on the latter, and you’ll get far better results than if you lump the two together. Even though engaged, in-stream video ads will be more expensive, they are still a great bargain – especially if when you target demographic or content affinity along with the in-stream purchase.

Now let’s pull a “you show me yours I’ll show you mine” to see what poor targeting has done to the online-video economy. 

Here’s a question for those brave enough to admit in comments below (feel free to use an anonymous name). What’s your YouTube CPM (income per 1000 impressions)? In other words, how much do you make per 1,000 views? It’s easy to compute: simply take your earnings in a given month, divided by the total number of views you get per month (divided by 1,000).

  • Example: you earned $200 last month. Your videos were viewed 100,000 times. So you divide $200 by (100,000/1,000). You get $200 divided by 100 equals $2.00 CPM.
  • Since YouTube keeps about a half, that would mean the company is fetching about $4 CPM… which is horrendously low if prerolls were used.
  • Show us your CPM?
Good news: eMarketer puts online-video advertising growth at more than 43% in the next year and 35% the next year. As marketers become more targeted and sophisticated, we should easily see a CPM lift of 20-30%.

Models for “Signing” YouTube Creators; Tips for Advertisers, Studios & Stars

Several trends are causing many independent “YouTube Creators” to sign with “new establishment” (web studios) such as Makers Studios (good luck finding its website), Next New Networks, The Station, Howcast and Machinima. Many early web studios were formed to create and promote custom shows for wide distribution. But the high investment ($1-$5K per edited minute) could not be sustained by the modest advertising dollars moving into the medium. In the past year, most have abandoned custom shows and are signing proven YouTube talent, many who have low costs, but large and steady audiences that are valuable to advertisers.

The trends driving these deals are:

  • It’s a buyer’s market. YouTube advertising revenue is relatively depressed because it’s new and driven mostly by Google Adsense, which allows even small advertisers to target viewers. The revenue model is largely based on “cost per thousand impressions” (CPM), and the income to the creator is mostly hovering at a modest $1 plus range… obviously YouTube pockets a portion before the creator is paid. Since an advertiser is often willing to pay far more for a targeted view, there’s plenty room for an intermediary who can command higher CPMs. Despite Google’s large salesforce, the display team at Google is relatively small. As I’ve said before, most media buyers are opting to put dollars into other sites because YouTube is less flexible.
  • Many solo acts have significant monthly views (mine alone are 5 million plus), but can’t justify selling their own inventory.  However if a network can assemble a collection of creators that are attractive to certain industry advertisers, they can rationalize a salesforce and a premium.
  • The marketplace for talent is growing increasingly competitive, making it more attractive to independent creators to share in such fixed costs as management, marketing and production. Many solo acts on YouTube lack even basic talent representation, and don’t know how to find sponsors or price their sponsorships (and some are not willing or capable).
  • Budgets are flowing online dramatically, as video consumption increases. YouTube has missed a significant portion of online-video budgets because Google’s emphasis remains on paid search (while smaller properties are focused on pursuing larger digital budgets and even television budgets). This is changing, and could become more complex as the lines become less clear between YouTube (which has often proclaimed to be a platform not a network) and web studios (like its rumored acquisition, next New Networks).
  • Cross promotion across creators can grow the size of an audience significantly, and collective groups (like The Station) can expose individual shows/stars to audiences that might not otherwise know they exist. Many creators have sought alliances because there’s strength in numbers. The brat-pack model is not to be underestimated, even though shared successful YouTube channels are rare.

While few web studios and creators will reveal detailed terms, here are a few models that I’ve seen first hand. I will avoid revealing specifics or suggesting which studios gravitate to various models. Even within the same web studios, the deals can vary dramatically based on the creator’s negotiating skills, their content quality, and their audience size. Most deals are more nuanced than the following, but here are some simplified examples:

  • We own you. Small “up and coming” creators were often willing to effectively sell their show to a web studio and become compensated at a fixed price per episode. This is increasingly rare, as it is risky to both the studio (who can’t be sure the star/show will succeed) and the creator (who loses the otherwise unlimited upside potential of a solo YouTube artist).
  • We own 50% to launch you. Some “web studios” sign new talent with a revenue split. A talented but unknown creator can gain accelerated growth via appearances in the network’s already popular shows, and in return provides a portion of his/her YouTube Adsense dollars to the studio. Both this model and the previous require the studio to “claim” the channel via YouTube, and then pay the talent in some form: usually a month after the studio is paid. YouTube is attempting to make this easier for the creator, studio and advertiser… but it’s still fairly complicated to execute. Since the creator can become blind to the actual revenue their channel receives, it requires some trust.
  • We “mark you up.” Since the average ad CPMs remain modest, some studios are able to offer a creator/show a premium CPM (income per view) that is higher than that to which they’re accustomed… but sometimes capped. For instance, the studio may promise to pay the creator $2 per thousand views, and pocket any incremental revenue. This makes sense if the studio can sell the inventory at an ongoing premium, and is even more attractive to the creator if the studio can promote and grow the channel as well. However it means the creator may not benefit from what I’d expect to be higher CPMs in the years ahead.
  • We split incremental proceeds. A more mature YouTube star may negotiate a deal where anything in excess of their regular YouTube “Adsense” revenue is split. The studio may, for instance, sell a series of sponsored shows to a brand or advertiser, providing a complement to typical display ads (prerolls, banners, InVideo ads). The studio also may offer additional “value ads” that are not easy to execute via YouTube directly (such as having a collection of creators promote the brand on their Facebook and Twitter profiles). The creator may occasionally get a fixed sponsorship income (a few grand) to provide messaging within the show, and the display ads are marked up during a specific timeline. We’ve seen programs like Howcast’s GE Healthymagination that involve a number of YouTube stars working together or sequentially. In some cases YouTube manages these directly, contacting top talent to participate.
  • Pay per sponsorship. Some studios remain strictly in the pay-per-sponsored video space, providing advertisers with a flat fee for a series of videos that mention a product or service. A creator who fetches 200K to 1 million views per video can command o5-50K for a single sponsored video, and the studio takes a percent. Again, YouTube does many of these programs directly since the marketplace for these programs is still immature. Hitviews was one of the early companies for these, and Mekanism is doing some now. In my experience, it’s far more profitable to a creator to do them directly via YouTube… but there’s little a creator can do to increase the quantity of these. They’re bought not sold.

In this blog and my book, I’ve argued that advertisers and creators need intermediaries to facilitate sponsorship programs when they go beyond traditional ad buys (invideo, prerolls or adjacent display ads). When I consulted with Hitviews, I helped orchestrate some of these complex sponsorship programs, and they require skills that are rare in traditional and digital agencies. They’re difficult to sell, tricky to execute, and require cash reserves — since creators must sometimes be paid before revenue is received from advertisers. I’ve also done these directly with advertisers since I have a marketing background, but that’s not easy for most creators. Still, these sponsorships are lucrative for creators and extremely valuable for brands. They take the advertising message to where it has greater influence (within the show) and cannot as easily be ignored. They’re also perpetual annuities for brands. Some of my sponsored videos have garnered significant views long past the campaign’s period.

Audiences can be tolerant of these sponsored deals as long as the creative is strong, and a webstar or show does not do them too often. To see some of my own sample sponsored videos click here. You’ll see that most are not heavy on the promotion since that can severely impair views, ratings and comments. My income for these has varied radically, and often does not correlate with the total views of the videos. In a few cases, the advertiser has paid YouTube to “spotlight” the videos, but most of the views are organic.

I have seen some of my favorite YouTube creators fatigue audiences by accepting numerous sponsored deals (especially in a short time period). I’ve seen both extremes: the advertiser paying far more than it should (based on quality of the video or total views), or the creator selling out for a modest fee (and sometimes not paid at all).

Here are some tips first for advertisers/studios, then for creators. My emphasis is on sponsorships rather than “signing,” since the former is more common.

  • Advertisers or studios should not, in my opinion, subsidize a show’s creation. That can get cost prohibitive to a brand, and can result in mostly paid views. Those are not nearly as valuable as “organic” views (where a show already has a recurring or loyal audience).
  • I believe advertisers should provide at least 50% up front (like with any media buy) and withhold 50% based on performance metrics (total views). This ensures the studio has sufficient funds to attract and pay creators, and also reduces the risk to the advertiser. However it seems studios and YouTube often commence campaigns before getting paid, which results in ridiculous long gaps (3-6 months) between posting a video and getting paid for it.
  • Studios (and advertisers) should be careful about the stars/shows they pick. Some have a reputation for delivering content that meets the needs of the audience and the brand, and others are known for turning in marginal content, missing deadlines, or even harming the reputation of the brand. It is difficult for someone not extremely familiar with YouTube and creators to vett them well. For instance, I was approached recently by Best Buy despite my disdain for the company.
  • A good “match maker” will instantly know what creators/shows are right for different advertisers/sponsors, and that requires more than an understanding of a channel’s demographics. Since most popular YouTubers ignore e-mail, it’s not easy to catch their attention even when dollars are involved. If I had a dollar for every false-positive “sponsor,” I could buy YouTube from Google.

Creators:

  • Creators should be very careful about signing “exclusive” deals, which limit revenue in other mediums or distribution channels beyond YouTube. I’ve been offered large monthly sums to move my content off YouTube and have never regretted declining. I’m also glad that I’ve never put a ceiling on my income, or provided any videos to a third-party with exclusively.
  • Since the CPMs are likely to get higher in coming years, I’d be reticent to sign a deal that locks me into today’s CPMs. If an advertiser can command higher CPMs for a specific video or time period, that’s nice. However I wouldn’t want to lock myself into $1 per 1K views, and then watch the average CPM rise.
  • It’s a good idea to have a time period attached to a deal, and opportunities for either party to exit. This is especially important since some of the web studios could be acquired by companies that may change the dynamics between the creator and the studio. It’s also important to have an agreement if an advertiser needs to remove a sponsored video (I’ve seen this happen more times than you’d imagine).
  • I urge creators to seek clarity about studio-exclusivity deals. A smaller creator will delight at signing with a studio that provides lots of new sponsorships. However what happens if that studio isn’t selling deals? Or if the studio is asking the creator to promote brands they don’t like? Or if the studio requests more sponsored promotions than the creator feels is appropriate (Smosh)? Is the creator obliged to take whatever deal the studio secures, or can they decline? More importantly, what happens if the creator is approached directly by a brand? Is he/she still permitted to do a sponsored video, and if so, are they obliged to provide a percent to the studio? Part of the reason I haven’t worked with Hitviews in more than a year is because it resented me working with other companies (YouTube directly or Howcast), and yet wasn’t providing a steady flow of well-compensated sponsorships. I’m still a fan of founder Walter Sabo however.
  • As online video begins to behave more like traditional television (where YouTubers are TV shows, and studios are networks like Fox or ABC) the dynamic could change dramatically. But it’s still a maturing industry, and deals very often favor one party far above another. So regardless of what is in writing, a relationship of trust is vital. There’s a certain “give and take” that is important for all parties involved (advertisers, intermediaries and show creators).
  • In general, I would rather be known as a pushover than a jerk… and the race is a marathon not a sprint. I have been “screwed” a few times, and have left money on the table (and I’ve steered clear of those people since). But I try to be flexible and make concessions knowing it’s a small industry, and that a professional, low-maintenance creator is more likely to earn the long-term trust of a variety of players that can provide income and other opportunities.
  • Finally, don’t be afraid to say “no.” I’ve seen several of my friends decline a modest or unfair offer, only to receive a much more generous one.

I’d welcome your comments if you have your own learnings… or your questions if I’ve been unclear. I’m sure it’s not an easy read, since it’s a complex space!

Lastly, if you’re a player in this space and regret not being mentioned, please identify yourself in comments or via e-mail. I am sure I have missed some web studios or intermediaries that are active in recruiting talent and wooing brands.

Can Google Sell Online Video Ads?

There’s been a lively debate recently among online-video enthusiasts about Google/YouTube’s capacity to sell display advertising. Sales people need different skill sets selling paid-search (automated, measurable, bid-based) versus display advertising (which is less measurable and more like selling television or print). To understand the distinction, see Google’s video; this is something we’ve been exploring at WillVideoForFood since Google bought YouTube in 2007. While Google has deep relationships with top companies and industries, it has only recently put emphasis behind non-search advertising.

YouTube’s display team (a few dozen) is rather small, and most YouTube ads are sold via Google Adwords not the dedicated team. While the display team sometimes lands some comprehensive ad buys with advertising agencies and brands, most monetization on YouTube is marginalized. The CPMs (cost per thousand) are so disappointing to some creators and online-video studios that some (from Next New Network and Revision3 to TheStation) have begun to sell their own inventory, or partner with ad networks that can attract better monetization for their views. Increasingly YouTube has provided creators and intermediaries tools to sell their inventory directly.

That said, there was some encouraging news from Jonathon Rosenberg, Google’s SVP for product management. According to this eWeek piece titled “Google YouTube, Android Drive $3.5B in Ads.”

Google’s display ad business… operating at an annualized run-rate of $2.5 billion. That’s counting YouTube ads, and all non-text ads running on Google’s network and DoubleClick networks, Jonathan Rosenberg, Google’s senior vice president of product management, said on the Q3 earnings call. “You guys always ask me (referring to analysts)… where’s your next multi-billion dollar business after search,” Rosenberg said. “There’s your answer.”

Advertisers Like “YouTube Safe” Content: So…

Advertisers like safe content, and it won’t be long before media buyers restrict certain YouTube ads to “safe” videos to protect their marketing clients and brands. So now that mama Google allows YouTube partners to note that the video is “safe” (no drugs, no violence, no sex, and no drugs), I’d urge you to code yours accordingly.

I just found my three most-viewed videos representing 50 million of my 160 million views (one is a scary prank, one is “funny“, and the third is “cute“). Then (see below) I rated them “safe” via the content-rating tool YouTube rolled out recently.

YouTube allows advertisers to target videos to ensure ads aren't displayed near strong language, nudity, sex, violence or drugs.

Are advertisers yet targeting content, and serving higher “CPMs” (the cost per impression metric that is the lifeblood of YouTube) around these videos? Don’t know yet, but it seems inevitable. And it took just a few minutes.

I can’t hurt since I am not so ambitious as to stray from generally family-safe content… I think I’ll survive if I just lost some high-CPM preroll ads featuring porn and crack ads. Yes I just said crack.

Hey this post will be good for search-engine discovery. Watch it become one of my most-f’ing viewed posts.

The Fourth Generation of Online-Video Advertising

Stop. Do not read another word before pausing for 15 seconds. Really.

Okay. How’d that feel? Chances are you ignored the advice, and perhaps it compelled you to defiantly plunge ahead with more interest. After all, the headline promised 4 generations, and that usually begs the question “what were the first three?”

But I made       you        wait. What if I forced you to wait?

Would you click the headline next time? I suppose it depends on how saucy it was. Maybe “New Video Compression Technology” would have instantly given your brain a pro/con dance. But “Fat lady falls down stairs and onto YouTube” might be the “spoon full of sugar” that made the interruption “medicine go down.”

According the book I read last night (Neuromarketing) your "old brain" (the prehistoric one that actually makes decisions) will love and remember this image. But your less important "new brain" (intellect, feelings) may find the text interesting.

My point is this: the third generation of online-video is preroll ads. Let’s get past this, shall we? They’re usually void of entertainment, unavoidable and will continue to proliferate and erode the medium — if unchecked. And according to my media friends, they’re hot. They’ve made me far more selective about what content I view on YouTube… it better be worth it. And this morning, in a move that might surprise you, I asked YouTube to turn them on my Nalts channel.

Think About.com in the mid-1990s, when it fell from a coveted curator of credible content to a cesspool of ads masquerading as content, and ads masquerading as more obnoxious ads.

So many ads you'll get an epileptic seizure (ask your doctor about ZIMPAT)

But let’s back up and look at the first three generations of online-video advertising in simple terms:

Lurker hangs around playgrounds and sometimes finds a victim.

First Generation: Lurker. Nickel CPM ads surrounded videos, and didn’t even subsidize the bandwidth. YouTube was a voluntary non-profit, and companies like Revver and Metacafe compelled creators with ad-sharing. Unfortunately the advertising industry saw online video with the same disdain it viewed the web in 2000. Oh- that’s the Wild, Wild West. We can’t put our brand next to that nonsense. In fact people aren’t even using the medium. You want reach? Look no further than the original tube.

Second Generation: Overlay ads. The healthy compromise of ads like YouTube’s “InVideo” model was what saved the medium. The ads had critics, but as an advertiser I felt like my brand got enough attention. As a viewer I felt like I could tolerate it. Ad a creator I felt like I enjoyed the higher revenue. But then the illness started with our children. They began reflexively closing the boxes, almost like you hit “skip” on the flash/splash screen on the publisher’s website. So click-through and presumably all the other polite terms for “no immediate action” (awareness, recall, attitude, purchase intent, favorability) dropped too.

You peeked the first few times, didn't you?

You want access to the party? You'll deal with him first.

Third Generation: Pre-Roll Bouncers. You won’t have to look hard to know my POV on these little bastards we call pre-roll ads.They’re annoying, intrusive and deceptive (you often mistake them for the video you thought you’d be watching). And I just asked YouTube to turn them on my content. Why? They’re profitable. Why? They work… for now.

Fourth Generation: In the Show. Before I explain what I hope will be the fourth generation, let me guess what you’re thinking… that these surround, overlay and pre-roll ads are here to stay. You’re right. The lurker, flasher and bouncer will be around as long as media buyers are held accountable to buying space like purchasing agents buying #2 pencils and copier paper. As long as reach, “frequency and single-minded impression” is chanted like monks by students of advertising 101.

Hmmm. I'm thirsty.

Now think like a receiver of advertisements. The Coke room on American Idol. The weather brought to you by Smuckers. They’re gentler on the stomach and more effective than the leading medication. Advertisers need to get within the show. It’s not easy to scale, it’s hard to do an “insertion order,” and it may not be the “path of least resistance” to getting your brand’s aided recall up by 50%. But it’s polite, there’s an implied endorsement, and it’s impossible to ignore. The brand is hero not the Soup Nazi. Most of Beyond Viral addresses this model of advertising, however my “lurker, flasher, bouncer” model is conspicuously absent in the book. It came to me in a dream last night. Shut up. Most of my dreams are better than your acid trips. This one just happened to be about advertising.

The burden of proof, I’d contend, is not on “in the show” to prove it’s scalable and drives purchase intent (although it certainly can’t be without accountability). Rather the burden of proof is on the less Darwinian evolved models to prove they’re a better bang for the buck.

Seth Godin is Wrong About “Ads as Online Tip Jar”

I’ve had a few people tell me they click on my YouTube ads to help make me some money. However the ads are mostly “CPM,” or “cost per thousand.” So the advertiser pays a fixed amount (say $20) for 1,000 InVideo ads regardless of whether people engage or not. The clicks do nothing for me. I jokingly tell them to just hang out for long enough for the InVideo ad to complete rolling (20-30 seconds).

The advertiser typically conducts research to determine if those CPMs were valuable or not — looking at interaction rate, and doing test/control studies to see if/how the ads resulted in a different view or intent.

  • Did you seeing that ad make that brand more attractive to you?
  • Are you more likely to buy the product?
  • Did you buy the product, or planning to?

These questions are answered through studies like “Dynamic Logic” polls on YouTube or other sites. If you see one, take them seriously. Don’t lie, and recognize that it will help the advertiser determine if they’re spending their money wisely. That’s the sustainable requirement to free content online.

I really like Seth Godin’s ideas, and we once interacted when I was trying to get him to speak at Johnson & Johnson (alas our humble public relations budget couldn’t meet his justified speaking fees). His concepts have always inspired and provoked me, so I consider it interesting when the Sethinizer says something so in contraction to what I perceive as a marketing/content creation reality.

Will give you marketing lessons for Adsense tipsVia Online Video Watch, I found a recent Seth Godin (a marketing guru) post on “Ads are the new online tip jar. Had he been running Google ads (where advertisers pay Google and the website publisher a fixed amount per “click” like paid-search ads), Google might have justifiably terminated him for “click fraud.” If I had text ads based on the content of this post and used the terms “sex, lawsuit, digital camera — or other terms that advertisers bid high CPC prices” and I encouraged you to click them, then I’m gaming the system. The advertiser may get clicks, but those clicks are not likely to lead to purchase or material value.

A good advertiser will get brief euphoria about a high click rate, but an evolved marketer will look beyond them.

For instance, I judge all of my search-engine campaigns (for my marketing day job) based on the cost for 3-plus pages (a crude alternative to an overcomplicated “quality page view” method). If I paid $2 to get a visitor and they visited 3 or more pages on my brand website, I’d call that progress. We’re eventually moving to “closed loop” marketing where I can hold each media buy accountable to a “trial” purchase (as measured by unique codes on an downloadable offer). Then I won’t really care about my cost per impression or click. I can judge an ad buy based on what it cost me to generate a new trial for the product. If that’s $20-$50 I’m a happy camper (obviously my product’s lifetime value is worth more than that).

So what I’m getting at is this. The “online tip jar” will, in the short term, help web publishers make some quick money via Google Adwords and other programs. But ultimately if the clickers aren’t purchasing then the advertiser will discover that the ads are hurting them. The particular site is driving up their bid price and they’re paying for clicks that don’t result in page views, perceptions (as rated by Dynamic Logic studies) or purchase intent or transactions.

The Bottom line is this… the online tip jar is a short lived and superficial model.

What matters is that my content (written or video) attracts people that have common and somewhat predictable interests and purchase behaviors. Then I’ve got to align myself with advertisers that sell products that match my audience’s needs, wants and desires. That’s a sustainable win for me, the advertiser and the individuals that watch or read my stuff. Everything else is just “gaming the system.”

You didn’t even read this carefully, did you?
Hold on a second. I’m going to light a fart on fire. There. I’m back.

How to Buy Advertisement on YouTube

It took me quite a bit of research via Adwords (advertisers buying ads) and Adsense (publisher tool to make money) to discover how to buy ads on YouTube. If you want to place an “Invideo” ad (one that sneaks up along the bottom) or other ads, you’ll need a lot of money.

According to Google’s Adwords help, Direct YouTube advertising contracts for US advertisers targeting the US require the following cost commitments. You’ll need to contact an advertising representative, and can learn more on this site on YouTube.

    • YouTube General: $50K or greater spend on YouTube within 90 days.
    • YouTube Brand Channels: $200K or greater spend on YouTube only.
    • YouTube Contests: $500K or greater spend on YouTube only.
    • YouTube Homepage Roadblock: $175K/day flat fee plus a $50K incremental spend on Google and YouTube over 90 days ($225K or greater total spend). Premium flight dates may require a higher initial flat fee.

But what if you ant to advertise on YouTube for less?
Fear not! (And select “more” below for details)

    1. Follow the sign-up wizard instructions to create your campaign until you reach the ‘Target ad’ section.
    2. Select List URLs from within the Target Ad Site Tool.
    3. Enter ‘youtube.com’ in the text box.
    4. Click Get Available Sites
  • If you’d like to advertise on YouTube for a lower cost commitment, you can sign up for Google AdWords for as little as $1 CPM (cost-per-thousand impressions) for targeting the entire YouTube site, or $2 for targeting specific YouTube content categories. To get started with AdWords, visit https://adwords.google.com and begin by creating a site-targeted campaign. You can then follow these steps to target your ads to YouTube pages.

    These “run of site” or “run of category” ads deliver impressions but are easy to ignore (hence the price).

    I think I might try some ads just for fun. I figure if I have to look at a Fred ad on my videos, I might as well try to see if I can get one of mine on his channel.

    Continue reading “How to Buy Advertisement on YouTube”

ROI Better on UGC Than “Professional” Video?

My friend ran a digital media buying company and literally wrote a book on internet advertising. He told me three things I never forgot:

  • The best color for a banner ad (from a direct response point of view) is “clear.” That is, whatever blends with the publisher site.
  • It’s hard — if not impossible — to make money if you’re buying advertising to get traffic, and your revenue is purely based on advertising.
  • Setting aside demos, banners perform better on weather and gaming sites than higher-end publishing sites (like the Wall Street Journal). This point perplexed me, but he explained his theory on this maybe counter intuitive discovery. The viewer is less engaged in the games and weather content, thus more likely to ditch it for a relevant online ad. It helped too, mind you, that the CPM for a weather.com is presumably much cheaper than a WSJ.com.

So as a marketer I’d say — assuming you could reasonably target your demographic — you’ll probably get a better return on UGC (user generated content, or amateur stuff) than professional content.

A Nalts video is less captivating than an SNL skit on Hulu (and admitting that fact came a little easier than I thought). In the next year, advertisers will feel temporarily safer with Hulu because it’s a network site (and God knows the ad networks and reps will be greasing the palms of buyers everywhere). Brainless ad buyers in NYC will clamour for inventory on the “safe” sites, and drive the CPM artificially high. Meanwhile, there will be a growing inventory of amateur content as YouTube rolls out its “partner program” wider than the paranoid advertising market can handle. So it will invariably drop or maintain.

A study (reported here by NewTeeVee) by The Diffusion Group shows a gap on CPM (cost per thousand views) already emerging:

  • CPMs for professional long-form video are about $40 now and predicted to rise to $46 by 2013.
  • CPMs for professional short-form video are roughly $30 now and expected to hit $34 by 2013.
  • UGC vids currently get $15 CPMs and are seen rising a little, to $17, by 2013.

My short-term bet for advertisers? Buy ads against UGC content, but pick your channels carefully. Don’t buy Invideo ads on Nalts if you’re selling cosmetics, but if you’re Coke running a direct-response program via InVideo ads you’ll probably have better luck buying ads against YouTube amateur partners than Britney.tv (she’s actually entertaining to her audience). YouTube may content otherwise, because they have loads of inventory on professional players, and more at stake there.

For that matter, you’ll probably get a better awareness rating on amateur content because we’re less interesting than professionals. You may, however, get a higher attribute rating (as measured by something like Dynamic Logic) if you buy ads on killer content (like Universal) versus another Fred video. Hard to say there.

Note- I’m biased on this analysis for two reasons. First, I’m in the middle of business planning, and my right brain has been completely shut down as a result. I haven’t even watched a video in days. Second- as a YouTube partner, I have an interest in UGC CPMs (I get a piece of the advertising revenue).

Now the good news for creators and advertising. It’s not an “either or” proposition. The Diffusion Group estimates that $590 million video ad market today will be a $10 billion video ad market of the future. I’ll take a smaller piece of that growing pie.

 

Survey of Video Advertising Rates

Web Video Report polled a number of online-video outlets, and it seems that $25 CPM (cost per thousand) is the norm, with slight variances based on the quality and “targetability” of the content. After a quick scan, you’ll get insights from the comments by Mike Abundo and Paul Kontonis.

Why Media Buyers Are Stunting the Growth of Online Video

Balding white marketer desperately wants to meet smart, strategic media buyer. If you’re one, please recognize you’re not the target of this rant. But the rest of  you are just so friggin’ short sighted and clueless.

There are some amazing online-video series that could be incredible opportunities for smart brands wanting to engage with early adopters of a medium that is changing the way we relate to content and brands.

Brands can reach depth and relevancy with their target, even if it’s not driving total significant awareness and immediately creating ROI through driving intent, store visits, and trial.

I give you exhibit one. iChannel.  A mere 8000 people are subscribed to this series on YouTube, but the views of the weekly series are roughly three times that (I’m the inverse of that with 30,000 Nalts subscribers, but some recent videos ranging in the 8-15K views). So it’s a healthy and highly devoted and interactive audience. Episode 31 had 180K views alone.

And it’s deeply philosophical, well acted, intelligently scripted and short and addictive.  I had the pleasure of appearing in one last May.

These guys spend more time setting up one shot than I do on my entire post production. The audience is like a microcosm of those watching Lost. Or The Office. They’re engaged, passionate, and hold their breath waiting for the next episode.

So why would a media buyer pass on this?

  • It’s not a big media deal. No hot AOL ad reps are pushing it.
  • The audience isn’t big enough. No scale yet.
  • The conversion from the episode to a bloated brand microsite wouldn’t be great.
  • They can just advertise on YouTube’s invideo ads and get there.

Why should an electronic manufacturer dye to have sole sponsorship?

  • They could probably own it for the equivalent of pocket change they dug from the back of their marketing budget couch.
  • It would be ground breaking.
  • The audience is perfect, and the level of product engagement would be far richer than an ad we’re trained to ignore.
  • It sets the stage for a new model where advertisers contract directly with creators of content (who carry fixed audiences). No worthless intermediaries clogging the pipes between.

What’s the solution to grabbing these types of opportunities? Have these deals championed by someone outside the regular media-buying job. While I was at Johnson & Johnson, the big deals between media players (networks and magazines) were done by folks that weren’t inline marketers like me, but had influence over the way media budgets were set across the many brands. After all, J&J couldn’t get interesting deals if each brand fended for itself, and the interesting partnerships required someone that could step outside the short-sighted world I live in when charged with P&L of a brand.