Why Online Video Fails To Meet Its Lofty Expectations
Why Online Video Fails To Meet Its Lofty Expectations
With television advertising being a $70 billion market and total online advertising weighing in at $22.7 billion for 2009, you can’t help but wonder why online video advertising only represents a $1 billion market.
In fact, according to the IAB, video advertising grew from $734 million to $1.017 billion from 2008 to 2009 — or 38%. That’s not bad, but when you consider that total video consumption per month has soared from 10 billion videos in July 2008 to over 33 billion in December 2009 (or 230%), you wonder why the revenue growth hasn’t mimicked the viewership.
For sure, economics tend to trail consumer patterns. Moreover, the recession and advertising slump didn’t help either. And yes, the so-called experts might not be all-knowing either, after all.
I personally think there’s more to it than that.
The Genie is Out of the Bottle
In 2000, I worked at a search engine company. We gave away our search engines for free and sought to generate revenue via advertising. The Nasdaq crashed and took down the ad market, after which point we sought to collect licensing revenues for our technology. With the cat out of the bag, it was impossible to get people to pay for the product afterwards. Lesson learned: If you give something away for free, you can’t charge for it subsequently.CTD…
An argument that professional content will continue to dominate the audience’s attention and that the likely way it will be paid for is through ads. But will the ad revenue be enough to fund the programming we’re fond of? Maybe a reality show, but probably not Lost, or CSI.
