I’ve been keeping track of - and tabs on - the alleged growth in online video advertising forecasts.
Here are some of the previous forecasts:
- An estimate of the US online video ad market for 2009 - set in 2004: $657 million | Source.
- An estimate of the US online video ad market for 2009 - set in 2005: $1.5 billion | Source.
- An estimate of the US online video ad market for 2010 - set in 2006: $2.3 billion | Source.
- An estimate of the US online video ad market for 2010 - set in late 2006: $3 billion | Source.
- An estimate of the US online video ad market for 2011 - set in late 2007: $4.3 billion | Source.
- An estimate of the worldwide online video ad market for 2011 - set in 2007: $10 billion | Source.
- An estimate of the US online video ad market for 2012 - set in 2007: $7.1 billion | Source.
Today Lehman Bros. came out with another set of forecasts for US online video advertising revenues:
- 2008: $1.091B
- 2009: $1.669B
- 2010: $2.387B
So while indeed, these remain bullish forecasts, they do seem lower than the previous targets. I do wonder what the quants at Lehman would project for 2011 and 2012. It would be nice to see where their crystal ball pegs those projections.
I don’t mean to disrespect Lehman… but what’s the point of forecasting one and two years out when existing models have done it 5 years out? I’m just saying, ese…
Anyway, Note that eMarketer had pegged this year at $1.35B, up from an initial target of $1.25B. I’m not sure if it’s a coincidence, but it is said that the Olympics would tack on $100M in online ad revenues. Could that be the additional spending? Not sure. Probably just a coincidence.
All in all, it’s important to note that we have yet to really crystalize what shall constitute “online video advertising revenue” with regards to formats. Covered that here, namely:
- The pre-roll? Nope. Let’s face it, this is the equivalent of the web’s pop-up and on the decline. Sure, traditional media firms are printing money thanks to pre-roll ads, but the danger is that they push away users and eventually shrink their audiences.
- The post-roll? That’s the pop-under… in other words, users are not as annoyed but marketers don’t think it’s worth a warm bucket of spit.
- The Picture-in-Picture? I suggested that… but not everyone digs that either?
- The Overlay? Video Egg made a clown of itself for boosting that… only to say that it represented tiny upside. I like this, but realize it’s not the equivalent of the 30-second ad… at all.
- The Companion ad is something I like and find valuable… after all, display banner ads in text content are worth jack because users scroll down and miss the ad quickly… but companion ads alongside video players are worth much more because they remain at eye-level… but try selling that to advertisers.
Moreover - and more importantly - will it really all be coming from advertising revenues, or licensing fees? I don’t think consumers want to pay for content, but what about other companies. We at WatchMojo.com are starting to generate more from licensing revenue than advertising sales. Over time, I expect advertising to surpass licensing, but right now, it isn’t. More brain farts here:
In Why Online Video Businesses are a Joke, I outline the case for paying for content in exchange for exclusivity, which is uber counter-intuitive in these days of hippie-minded super distribution.
In Does the Law of Diminishing Return Apply to the Theory of Content is King, I make the case that while every incremental unit of distribution/video consumption is welcome, when the ad model is under-developed (or crappy as I like to call it), you actually tend to dilute your offering by giving it away for free.
In Advertising vs. Licensing, we began to explore the merits of the two models, and argue that in early periods of growth, licensing will prevail, while in boom times, advertising revenue will outperform licensing and trace this obsession we have with speculative, straight advertising revenue share deals to two case studies: MTV and Google.
In Successful Revenue Models for Content Libraries, we outline all of the various options available to content owners.
Lastly, who will earn those revenues? We covered that here.
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WatchMojo NewsletterWhat’s the best way to draw attention to something you don’t want attention drawn to?
File a lawsuit.
That’s what the folks at VC fund EDF did.
Not smart.
Everyone was clamoring today about how Apple surpassed Google in market cap today.
In all fairness, indeed, when measured by market capitalization (shares outstanding x share price), that is true.
But while Google has $12.7B in cash on its balance sheet, Apple has a whopping $20.7B. In fact, in 2009, it’s expected that Apple will have $30B in cash, and by 2010 might even surpass MSFT’s cash hoard.
What does this mean? Well, not much, other than the fact that when measured by enterprise value (market cap less cash plus debt), Apple trails Google $135.79B to $145.31B.
Over time, I don’t doubt that Apple can continue to see both its market cap and enterprise value grow, and eventually surpass Google’s. Google remains a one-trick pony (search/AdSense) whereas Apple now has computers, music players and phones to boost its growth rate… no wonder Eric Schmidt et al. are so hellbent on video and wireless.
Quintura’s Yakov Sadchikov is a fine example of an entrepreneur and executive who maximizes blogging to the fullest to bring visibility to his company.
As a Russian writer and entrepreneur, he has a front row seat on one of the most dynamic and exciting markets in the world (not talking merely web markets or economic market, we’re talking market for products, but also people and ideas…)
Russia is even more so than China and India leading the world in leading the world in the 21st century, if that makes sense.
But Yakov is fortunate to have a unique edge which is his being in Russia. Corporate blogging is a great platform for entrepreneurs to raise visibility for their company and break down barriers in business development.
However, I personally find myself increasingly cornered because we have so many partnerships (fortunately) that any commenting on any company can come across as me airing in public what ought to be left private. For the record, sometimes we have NDAs, but even when we don’t, I generally don’t cross the line between my general observations of our industry and our company’s interactions with peers.
But that is idealistic, and frankly, naive. Anytime I tag a post with a company we work with, invariably it’s a double-edged sword.
That’s just one pitfall. Another, frankly, is the time it takes to be a world-class blogger in coming up with intuitive insights and critical analysis… ooh… big words, but you get the idea.
I think Jason Calacanis is one example of an entrepreneur who stopped blogging - maybe temporarily - because his VC overlords started to wonder what he spent more time on: his company’s operational dashboard or his blog’s publishing dashboard.
I don’t have VC overlords to worry about… but I am not foolish, as much as blogging opens up doors and adds visibility, it also closes down others.
I certainly don’t want to make it sound like I am discouraging Yakov, Jason et al. to stop or even reduce blogging, au contraire, both provide great insights from their respective vantage points, but I think both gents would agree than sometimes, it’s good to step away from the machine and focus on the bizness.
Then again, maybe that’s just my mood these days: there aren’t enough hours in a day for me to focus on our business deals and pipeline… over time that changes, if you enjoy writing, and people know I’ve never met a keyboard (or pen or microphone) I don’t like… then you always find your roots and get back to pontificating.
Live streaming is the bottom of the user-generated content barrel: not only it’s low quality, but it’s bad low quality stuff, and worst off: advertisers really have no clue what to expect.
It’s as monetizable as gay Nazi propaganda, laced with profanities, essentially.
YouTube, meanwhile, has desperately been trying to make the $1.65B Google paid for it seem sensible. Wisely, it’s now thinking against getting into the live streaming market. Frankly, the space is very crowded, so it can always scoup up a desperate player for pennies on the dollar down the road. But I doubt it wants to, especially with advertisers fleeing the lower performing and less safe environments.
We’re entering an exciting period now where hype, flash and buzz just won’t cut it. The latest exhibit: Spotrunner lays off a bunch of staffers.
It’s not all bad: online video is about to take off.
