Contentonomics: Ad Dollars Scarce For Web Video

Technical and commercial challenges mean that even the biggest viral hits aren't generating much in the way of advertising revenue—so far.
Despite the success of Web-only programs such as "Crash Test Kitchen" and "Alive In Baghdad," original video content syndicators and producers aren't yet seeing big ad dollars in return for their efforts -- even when a show ends up a viral hit on a massive aggregation site like YouTube.

"The checks aren't very big from the broadband sites," said Jimmy Hutcheson, president of EgoTV. So far, distributors, such as YouTube, "aren't monetizing the traffic," said Hutcheson, who spoke Tuesday during a panel discussion called "The Syndicated Video Economy" at's Contentonomics conference in Los Angeles.

The reasons why Web video is hardly a cash cow, despite the medium's ability to generate millions of views for viral fodder, are manifold. They range from technological incompatibilities between sites, a lack of uniform distribution models and metrics that some advertisers insist on, and content ownership questions. "As exciting as the syndicated video economy promises to be, there's a lot of issues," said panelist Gary Baker, CEO of Web video clearing house ClipBlast. He added, however, that the nascent Internet video industry "is not going away."

To capture more ad dollars and become more competitive with broadcast TV, the industry must develop a common frame of reference for valuing eyeballs and other metrics. "Ad growth is in fits and starts because there is no common language about what an ad dollar is even worth" online, said Damon Berger, director of programming at content producer and syndicator Revision 3.

Another issue holding back the Web video ecosystem is the lack of compatibility between video players. Destination sites like ESPN, Fox, YouTube, and Hulu all tend to have their own, branded players that use their own technology. To solve the problem, ClipBlast is developing player widgets that can travel with the video as it traverses the Internet. "Advertisers could even sponsor the widget," said Baker.

Despite the challenges, panelists said they were confident that Web video represents a real business model -- given the enormous distribution possibilities. Noted Hutcheson, "There are 1 million broadband-enabled TiVo's alone."

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