Please Stand By

Is anyone making money on web video?" The publisher of one of the most popular and long-running video shows online recently posed that question to one of his peers and me. The other publisher, who is responsible for hundreds of hours of video content on her suite of branded media sites, just shook her head. "And anyone who tells you he is making money on video is lying," she contended.

In February of this year, comScore estimated 73% of internet users viewed video content of some kind, and yet, at this point, the best estimates I have seen peg online ad spending in the category at well below $1 billion. The disconnect between usage and monetization in video is severe for most publishers, and my guess is that it will continue for some time to come. There are several Catch-22s at work in the online video ad model, and that, ultimately, is the problem.

First, many publishers on the B2B and consumer side of content tell me that they built video properties for their brands in large part because the ad community clamored for "premium" inventory. Sure, there is a lot of YouTube video circulating around the web, but many advertisers consider that kind of content a no man’s land for ads. They want to follow the eyeballs into video but not to wrap their brands around 10-second clips of cats falling off TVs (again) or some grisly skateboard accident a 10th grader uploaded to

However, it turns out that even the most loyal visitors don’t come to a trade or consumer site expecting video. A recent survey from video search engine ClipBlast reported that 27% of users find video by a friend’s recommendation and 22% use search. That suggests that video discovery habits are far from fixed and reliable. People are stumbling upon video online, not tuning in to it the same way they do on TV. Building a predictable, large audience for video from an audience that does not identify your brand with video is going to be a hard climb for everyone.

The other Catch-22 is that the very ad formats that monetize video, the dreaded preroll spot, also depress viewings. This is a dirty little secret that most web publishers dislike discussing openly, though most of them know that the expectation of a preroll by the user discourages use. The industry continues to talk a good game about trying different formats, like skinning the media player or using fancy overlays that run in the bottom third of a screen. The reality is that most advertisers are just pouring their TV or trade show video spots into the web channels whether the publisher likes it or not. Someone who works at one of the biggest providers of news video on the web told me the company begs its advertisers to send in shorter spots, but it still ends up slapping 30-second ads in front of 2-minute news stories.

Which is not to say there are no promising models, especially on the B2B end. Sponsored video webinars and webcasts can bring in tens of thousands of dollars to a publisher. Traveling around the country delivering live demos for high-priced business products is a time-consuming budget buster for some vendors. A well-managed and well-distributed videocast can be far cheaper and still deliver good leads.

Clever advertising and meaningful video content really will keep them coming. Construction industry publisher Hanley Wood’s new BuilderTV at, for instance, has its editors really grill company executives about the hard times housing is facing, and it makes informative, not gratuitous, online shows. Its sponsor, a window and door manufacturer, has a hilarious set of ads that are just as interesting to watch. The manufacturer is happy to tease viewers with a 5-second preroll that invites them to click through later to see more of its own video. This is a video combo professionals will remember and revisit.

Creative packaging and reselling will be just as important as programming. High school sports media company Stack partnered with a division of Foot Locker, Inc. to feed its video into one of the retailer’s branded sites.

For video models to work financially, publishers and sponsors have to move farther than they have already. We need smarter, braver ad formats from advertisers. We need must-see programming for publishers. And from both, we need more integrated and innovative sponsorship deals. Otherwise, online video is going to be a money pit rather than a profit center. This model is not ready for prime time.