I’ve always believed that content, while messy to develop, is a hedge against any downturn because if done right, has an infinite shelf-life and protects you from “adoption risk.” You know, the risk that no one uses your product. It’s one thing for a search company to launch amongst a myriad of competitors, because as a consumer, I use a bunch of search engines to this day. But as a business consumer, there are very few video advertising products I will use in our company’s lifetime.
Every day when I see a new video content site pop up, I think it’s a validation of people’s insatiable need for quality programming online.
But every time I see a new ad video technology launch or get funded, I just pray: I hope the video ad market will be huge because otherwise there will be way too mouths to feed at the table when the music stops.
I initially addressed this last week in “Has the ‘Bubble Pocket’ Moved From Video Sharing Sites to Video Ad Networks?” and today’s announcement that Digitalsmiths has raised $6M in Series A funding (the company is not a newbie, though) reinforces that question.
Let’s examine some numbers:
Search advertising, while slowing down, remains the top dog, commanding 40% of the total online ad pie.
Video and display, while clearly outgrowing search, remain relatively tiny. Video advertising in particular is a crap shoot, as the estimated video ad market has grown (not the actual market folks, the estimate of what this might be) from it being $1B by 2010 to now being upwards of $3B.
I am personally seeing some things on the front lines that suggest that indeed (especially if ad dollars leave TV to online), these numbers are all in fact conservative, but I would not mortgage my house on it.
Digitalsmiths today joins a cornucopia of players competing in this space: the list includes Brightcove, Brightroll, Video Egg, Tremor Media, Broadband Enterprises, Yume, Scanscout, Instream, VideoMovement… oh yeah and Google. That little company out of Mountain View that just bought YouTube last year for $1.65B.
Of course, that raises the other question, that search will potentially trump these enabling/intermediary/platform plays, and if that is the case, then companies like Pixsy, Blinkx, Podzinger/Everyzing, and oh yeah Google might have a better sot at winning.
Anyway, let’s hope video advertising does materialize. Because if there’s anything sadder than seeing 5 pounds of meat being stuffed in a 1 pound bag it’s seeing 1 pound of meat try to feed a 5 pound bag.
Disclaimer: We run and operate WatchMojo.com, a video producer. We’re partners with a bunch of these sites on the syndication front. We have gotten inquiries about using most if not all of these services, some of which are great, some of which are less so. Our search unit MetaMojo.com runs a video meta search… We wish all of these great companies much success and hope the weight of the financing does not kill them before the market actually develops.
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