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Contentonomics: Digital Content Is No Cash Cow

Millions of viewers do not necessarily translate into millions of dollars for online sites.
Despite all the hype around Web television and online entertainment sites like Hulu, advertisers still want to spend most of their money on the boob tube, not YouTube. As a result, making any real money off Internet content requires careful planning and a long-term view.

That was the feeling among panelists from entertainment and marketing companies who spoke Monday at Contentinople.com's Contentonomics conference in Los Angeles. "It's frustrating when you see the traffic numbers and the dollars that are connected with that," said Patrick Mahoney, senior VP for digital media at Entertainment Studios, which produces and syndicates television shows.

Entertainment Studios plans to launch six high-definition shows later this year for exclusive distribution on Verizon's FiOS broadband service.

Speaking at a panel session called "Advertising: The Monetization Engine for Broadcast and Broadband TV," the panelists agreed that, so far at least, advertisers aren't willing to pay big bucks for online spots that accompany Internet television shows.

The situation is such that many producers are happy if Internet ads simply allow them to break even on the costs of repurposing shows to their Web sites. "The Web site is more a marketing cost," said David Hutchinson, senior VP for digital media at syndicator Program Partners. "No one is putting their kids through college on online ad sales," he added.

The problem, said digital media consultant Stephen Banfield, is that paid content may not be the answer, either: "Given what we're seeing in the economy, are people going to pay $1.99 for an episode when they're worried about their jobs?" Banfield said entertainment executives who think they can rely on online ads for revenue "may want to think about putting their kids in state schools."

Panelist Romi Mahajan, a former Microsoft executive who is now chief marketing officer at Seattle-based digital ad agency Ascentium, said that part of the problem is that the Web, as an advertising medium, still needs to compete with traditional media such as newspapers and even "nonsexy" outlets like billboards. "There's a limited number of ad dollars that we're all going after," he said.

Still, the panelists didn't completely write off Web content as a way to make money. One advantage that the Internet has over television is that it yields precise viewer data instantly through tracking tools such as Omniture. Said Mahajan, "The promise of the digital world is that you can rev things very quickly based on data."

To read more about Contentonomics, go to Contentinople.com.