How Did AOL Beat Google/YouTube in Online-Video Advertising?

Surprising news from NPR about the implication of AOL buying Adap.tv.

AOL is now above Google/YouTube in online-video advertising views. In ComScore’s Web video rankings for September, AOL topped Google as the property with the most video ads watched last month, with 3.7 billion views compared to the YouTube parent’s 3.2 billion.

 

This is a bit misleading, however. Google/YouTube’s income and profit from video ads is likely far higher than Adap.tv and some AOL ads. Adap.tv is an intermediary, and much of the revenue from its advertising income is shared with both the creator of the video or the site where the video appears.

Here’s an example. AOL sealed a partnership with ESPN to syndicate ESPND clips on AOL Web sites, including owned sites like Huffington Post, and onto connected devices through its AOL On app. That means when advertisers pay AOL, much of that revenue is shared with ESPN and some would be shared with non-AOL sites where the videos are further syndicated.

Of course Google/YouTube also pays its content creator a portion of the revenue. But when you buy an ad with Google/YouTube, there’s no ad network involved to take a split. And because Google/YouTube hosts its own videos, they don’t need to share with another site or syndicator.

This explains why AOL is partnering with A-list celebrities like Sarah Jessica Parker, Gwyneth Paltrow, and Jonathan Adler to either host or star in original Web series for its AOL On Network, the company’s video platform. Ads around these types of program deals don’t have to be shared with anyone except the creators and AOL. Advertisers will pay far more to be a part of custom programing if it gets decent views. AOL can snatch even more if it can get a sponsor or exclusive advertiser.