Local online news video advertising: 6 ways to monetize content

Movie Icon: RSS(Editor’s Note: This is the last in a three-part series on local online news video, summarizing the findings of a thesis study that examined the Minnesota media market and their use of online video. Part one looked at content and part two examined design and usability. Love to hear feedback in the comments below.)

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It is clear that the economy has damaged efforts to expand and improve online video. Many local news sites have had to cut staff, and they are working to produce content in survival mode. However, video advertising is expected to have the largest growth out of any sectors in online advertising. In December, eMarketer released predictions for video ad spending, saying that it would rise by 45 percent in 2009 to reach $850 million. Though ad spending has slowed a bit, video advertising remains strong. The opportunities are tremendous. However, half of the local news sites have yet to implement or even sell a video advertisement.

Taking advantage of the expected growth and monetizing video content:

  1. Internal hosting: It provides more opportunity to monetize videos. News sites with a significant interest in monetizing video content should move away from hosting content on sites like YouTube, which provide little opportunity for profit from revenue sharing.
  2. Pre-roll advertising: It has proven the most effective thus far. Half of the local sites included pre-roll advertisements, while the rest did not incorporate advertisements in videos at all. The Star Tribune uses an effective system based on length of content, rather than a number of videos, before showing a pre-roll ad. This seems to be the best balance in incorporating advertising within videos without ruining the reader’s experience. WCCO’s Daenzer said post-roll ads are not attractive to clients because viewers rarely stick around to watch them. With pre-rolls, on the other hand, viewers already have an interest in watching the video and are more willing to sit through a short advertisement, Daenzer said.
  3. Complementing ad forms: Incorporating a banner ad that complements the video ad provides more exposure on the page and is usually more attractive to advertisers.
  4. A 15 second rule: None of the five news organizations that displayed ads used ones that were more than 15 seconds long. Because the attention span of online video viewers is lower than that of television, advertisements longer than 15 seconds are likely to lose a viewer, Daenzer said. Hulu and other sites have had some great success with offering longer ads to be able to watch shows ad free, but it is hard to tell whether a similar practice for news webcasts would be acceptable with viewers and appealing to advertisers.
  5. Search: Search advertising is expected to grow as well, and news sites could take advantage of the revenue that Google search has been making money off of for years. If local news sites incorporate specific video searches, they could sell sponsored links to appear at the top.
  6. Producing advertisements: According to Gordon Borrell, CEO of Borrell Associates, news companies need to create a separate staff with divergent ideas that will sell online advertising. As the economy recovers, local news sites should seek to hire specialized video advertising producers and online sales staff to tap into the online market. Video ads are still only a small piece of advertising. It totals only 5 percent of website revenues for newspapers and 10 percent for television websites.

More importantly, in all aspects, to expand and improve video, the local news sites will have to focus more efforts and resources online to decrease the gap difference in online versus print or on-air advertising. The need for quality, innovative approaches to online news video are greater than ever.

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Sites studied:

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10 thoughts on “Local online news video advertising: 6 ways to monetize content

  1. Rick Falls

    It didn’t surprise me that the viewing time is less than for other media.

    I think internet users are more difficult to grab the attention of versus say TV viewers due to their higher intelligence.

    That makes the point that even when the new media is adapted to, the message will need to be tweaked for efficiency with the sharper viewers as well.

    The old media would be wise to allocate as much as they can as quickly as possible to the new models of potential monetization.

    Thanks for the insights.

    Rick Falls

    Reply
  2. Pingback: Vadim Lavrusik » Blog Archive » 6 ways to monetize online video

  3. Ian Hill

    Hey Vadim,
    You’ve done some interesting work which can help spur additional discussion on the role of video in the future of online journalism. However, both you and your readers should be careful when drawing conclusions from your work. Just because something works in Minnesota doesn’t mean it will work in other markets. In the market where I work, for example, breaking news and crime video is far, far more successful than features video.
    One topic that perhaps you or another blog reader should explore in more detail are the resources news organizations put into video vs. the reward. As you pointed out, money can be made through pre-roll advertising. But in local markets, will advertising clients see enough response to those ads to be encouraged to invest in long-term contracts? Is there enough or can there ever be enough traffic to warrant charging reasonable ad rates. If the answer is no, should publishers then be putting theIr (ever-decreasing) resources and manpower into developing other online features, such as interactives, instead of video.
    You’ve got an interesting case study. But I think much more work still needs to be done before we can say there are best practices for online news video, or any news site feature, for that matter.
    Cheers,
    Ian

    Reply
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  5. Jeff Achen

    You said: “News sites with a significant interest in monetizing video content should move away from hosting content on sites like YouTube…”

    There are ways around this. For instance, many video hosting services do not prohibit “baked in” ads that are part of the uploaded video, so there is still a way to generate revenue. Services such as Kicklight enhance YouTube by allowing links attached to videos and these can be monitized, all for free.

    I’d also like to suggest another potential video advertising idea: how-to sponsored videos. There could be significant revenue from the creation of video ads that serve the dual function of content and advertising (as long as they are clearly distinguished). At Thisweeklive.com, we’re trying to push this type of video ad that stands along and can be up to 3 min. long. Then, as we get a few under our belts, we can archive them in a “how-to” section. The idea is much akin to Yahoo!’s “how-to” video catagory, except that we incorporate local advertisers in the videos to share their secrets about gardening, style and home maintenance for example.

    Reply
  6. Gordon Borrell

    Interesting conclusions, and directionally correct in my opinion. Regarding Ian’s comment about news and crime video being popular, I think some perspective is in order. On the Internet, vast amounts of generalized traffic often don’t translate to revenue — which is what Vadim is trying to address here. We work with over 1,000 local media companies, and we’re finding that the mass-media business model of BIG TRAFFIC = BIG MONEY doesn’t work on the Internet. Few advertisers are saying, “give me 100,000 pageviews.” Because the Internet is a lean-forward medium (as opposed to TV or newspapers, which is lean-back), people are not as receptive to advertising. Ads must be related to the content for them to see them. So a good rule of thumb is that in newspapers, advertising is adjacent to content; in TV and radio, advertising interrupts content; on the Internet, advertising IS content. That doesn’t fit with crime and general video news. To prove my point, I can look down into any market, across 4,400 local media properties that participate in our annual revenue surveys for their online operations, and see who’s making the most money. There are many, many niche sites with small amounts of traffic that make far more than an entire TV station site. Why? Because their content is exclusively related to advertising niches — like weddings or autos. So my suggestion with video is to think long and hard before porting over the mass-media model of loading up your video offerings with crime and news videos.

    Reply
  7. Ian

    Hey Gordon,
    Your point is well taken. I was referring more to the fact that you can’t reach general conclusions from Vadim’s research, as he only studied one market.
    -Ian

    Reply
  8. paulbradshaw

    “In TV and radio, advertising interrupts content; on the Internet, advertising IS content.” – great line, Gordon, sums it up nicely, and explains neatly why advertising budgets may slowly migrate to media production, given that companies can now cut out the middleman (this was already happening with in-house magazines).

    Reply
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  10. wortformer

    hey ho. this is what media-makers are looking for. a way, how can we make money with online-video? things are in development and today we are trying to find the best way to monetize video-journalism. in us as well as in germany. thanks for this compilation …

    Reply

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