I went to a Westminster eForum meeting yesterday. On the agenda was “The Future of online content” and much of the discussion revolved around business models.
Several contributors seemed to feel that advertising revenues would ride to the rescue of media owners and that other revenue models were not worth bothering with. In particular video advertising was held up as a powerful revenue generator.
Well, it’s true that you can pay over £20 cpm for some video advertising inventory. But you can also pay £2 cpm! The reality is that the marketplace for video advertising is still forming and value is still being established. OK – online you can click through to a website from an advert – but you can buy TV advertising of £3.50 cpm or less, and even primetime can be bought for well under £20. Is a pre-roll online ad worth so much more than TV?
In addition, does a linear video ad, which by necessity has to be capable of delivering its message without audio, represent the best way of advertising online? Surely more interactive formats are likely to be more engaging.
Given that online display revenue actually declined last year in the UK it seems unwise to rely on video advertising to rescue the online media industry. And while video advertising will no doubt have a part to play, media owners need to examine all other opportunities. These will include:
- Subscription – possibly along the lines of that being trialled by Johnson Press, or possibly of certain premium elements of a site – which common sense would dictate will be elements that are hard to find elsewhere and which are particularly suited to delivery in an online environment
- Data – which can be used to help advertisers understand marketplaces, deliver advertising messages that are effective and develop new products and services
- Syndication – but only where this doesn’t have a major impact on subscription revenues
- E-commerce share – which can involve specially developed readers offers or simply a share of revenue from sales made by third parties
- Pay to participate revenues – which might include fees for joining communities (e.g. dating), talking to specialists (e.g. astrologers), competition entry fees, and fees to participate in online games and virtual environments
Of course, advertising will also be an important source of revenue – indeed it may remain the largest source of revenue for many media owners; but on its own it is unlikely to be enough to be enough to deliver a robust online business for most media owners.
Jeremy Swinfen Green's YabaDabaDoo 