Social networking is more popular than ever, but it continues to trail online video as the most popular activity online:
Over 70% of US web users watch video clips on the internet, making online video the leading social media platform, ahead of blogging and social networking, according to the Global Web Index.
This is consistent with the fact that consuming content has long been the dominant activity online, at 47%.
The problem, of course, is that in both online video and social media, the business model is trailing the consumer behavior, something that is in fact applicable to all of digital media (people spend 10-25% of their time online, but advertising budgets don’t reflect this yet, with less than 10% of total advertising expenditures going to digital).
The problem with social media and online video is quite different, though:
- in social media, marketers have rejected the notion that they will embrace social networking sites, UGC and the like. eMarketer has consistently scaled back projections for social media advertising, and services like Facebook and Twitter have began to look for non-ad based revenue sources.
- in online video, when it comes to professional (be it super premium or premium) content, marketers are desperate to spend more money, but the problem lies with the fact that the world’s “market maker” for online video, YouTube, has hitherto rejected calls to run pre-rolls.
This might be changing.
Last month, Media Week UK reported that YouTube is testing pre-rolls with some select partners:
Content partners include Channel 4, BBC Worldwide, National Geographic, ITN and Discovery Networks.
In the UK, Warner Brothers, Match.com, Activision, Renault and Nissan will be the first advertisers to show pre-roll ads over the next few weeks.
Channel 4 is the first partner to show these pre-roll ads against content, starting today (21 May). The campaign, brokered by PHD, will promote the new Warner Brothers comedy, The Hangover.
Suveer Kothari, head of YouTube in the UK, said: “Since we launched YouTube, we have been trying to balance the demands of users looking for free, entertaining, professional content on the web, premium content owners looking for ways to monetise their content, and advertisers looking for more premium content for them to showcase their tv creative against. We believe this test will help us balance these demands.”
The recommended length of each pre-roll ad will be 15 seconds, although there will be an upper limit of 30 seconds. The test partners will be able to sell pre-rolls through YouTube. They will be sold on a CPM basis.
I think this is a step in the right direction, despite what the purists will say. Don’t get me wrong, I don’t want to be a hypocrit, as a user, I tune out of pre-rolls. But that being said, if YouTube - who commands 50%-75% market share - keeps snubbing pre-rolls (the main format advertisers want), then they keep stalling the growth of online video.
I am not even saying that one should be selling pre-rolls on YouTube, but that when you tell a marketer that you cannot sell any pre-roll ads, they tend to lose interest.
After all, despite what a lot of philosophers want to believe, pre-rolls is the main format of online video because it is the one users want least. Do you really think when TV was founded, viewers begged for the 30-second TV spot? Of course not.
If and when YouTube embraces pre-rolls (it can be with a very high frequency capping, such as 1 per 24 hours per user on selected content) then you will see revenue soar for both the site, its parent Google and the online video segment in general.
Disclaimer: WatchMojo.com is a content provider to YouTube, we generate 40% of our total streams on YouTube.
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WatchMojo NewsletterMySpace today fired 500 of 750 employees internationally. This is on top of the 500 people they fired from a staff of 1,000.
I know the idea of starting a company and opening offices is growth, revenues, job creation and profits, but you cannot encourage entrepreneurship in an environment where laying people off is impossible and so punitive to the employer.
Unlike our recent domestic restructuring announcement, what we are announcing today is a formal proposal we intend to implement, rather than an executed plan. As required by laws in countries where we operate, we will not implement the plan until we have consulted with potentially affected employees.
Read more.
Having been born in Iran, I have been keeping an eye on the developments on the ground over the past few weeks. I spent my first five years in Tehran, but my dad - who then worked for the Spanish embassy - was wise enough to get us the hell out of the place and move us first to Madrid, then to Montreal.
I’ve always felt that the children of those who pushed for the 1979 Revolution are now going making a regression toward the mean, so to speak. The 1979 revolution got rid of one US puppet (the Shah) but the movement was essentially hijacked by religion, and taken to the extreme.
The citizens of the Soviet Union used to say that during Communism, “we pretend to work and the government pretends to pay us”.
Well, for thirty years, Iranians have pretended that a theocracy can mesh with a democracy. It can’t. Everywhere across the world, throughout history, religion has been sidelined in order for democracy to flourish. There will be no exceptions. The US got too religious during Bush’s regime, it went bankrupt due to its crusade in Iraq. Israel too will have to adapt to ensure its own survival (at one point, there will be more Arab Muslims in Israel than Jews, so you do the math and tell me, how Israel can remain both democratic and Jewish - but I digress).
I won’t get too much into politics in this post (I’ve been linking to some interesting links and commentary on our political blog WorldMojo.com, feel free to check it out and subscribe if you want ongoing commentary) but want to instead touch on a clear conclusion regarding technology and social media.
For the longest time, when talking about the Facebook’s and Twitter’s search for a business model, I argued that social media changes the publishing paradigm quite a bit, but its business model will not be ad-supported. It can’t.
What is happening in Iran today is an extreme case study proving this hypothesis.
With the Regime censoring local media and kicking out foreign media, what we get is very limited.What we do get - either by way of YouTube, Facebook, and of course Twitter - are powerful images, sounds and videos.
Lenin used to say that war serves as an accelerator of history, well, you can say the same thing about technology. Previous student protests would have been crushed much easier. This movement is both more broad, but more pesky because of social media tools.
That Economist cover above is not from the current uprising, but from the previous “analog” ones that ultimately never went anywhere, per se.
In the areas where social media is at its most vital and powerful (such as the video of Neda Soltan’s last moments) you cannot possibly envision an ad supported model. It is perhaps insensitive to even raise such a comment, but this is after all a blog covering business matters.
Historians will look back at what is going on in Tehran and other parts of Iran and see it as a turning point in the country and around the world. Folks who run social media enterprises should also view the events as a game changer for how they envision the evolution and future of their businesses.
