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First, Newspapers. Now, TV

2008.04.26

Online video has been a hit. Americans watched more than 300 million videos on Google's YouTube in December alone, and the amount of time spent watching video online grew 34% last year.

While that's not been entirely at the expense of television viewing, the growth sends shivers down network executives' backs. Worse, Google's new plans to wring advertising revenue out of online video could eventually cause broadcasters a lot of pain.

But Google has yet to make money out of online video, despite dominating the business. It doesn't even bother to break out its negligible video-related revenue.

Now it's trying two separate strategies to fix the problem. First, it plans to sell ads on videos that appear elsewhere on the Web. The ads will be in the form of videos or clickable text that appears on a small portion of the larger video image.

Second, it plans to place clickable video ads on the side of its own search results pages. So if someone searches for "skiing," he might be presented with a video featuring Bode Miller talking about how great his Rossignol skis are -- along with some undoubtedly amazing footage of him going downhill. The video advertiser would pay Google whenever someone clicks on the ad.

If Google succeeds in marrying advertising to online video, broadcasters could find themselves in a bind similar to newspaper publishers. The latter suffer from declining circulation, higher production costs than their digital brethren and advertisers that are switching to cheaper, more effective online distribution.

Broadcasters already face variants of the first two problems. Google's initiative might complete the trifecta. The cost of reaching a thousand viewers online is about one-fifth the average cost of doing so via a major broadcaster. And the fact that users click on ads that interest them means a campaign's efficacy can be measured more accurately.

The roughly $80 billion annual market for television advertising has held up remarkably well over the past several years. It might now be in for a big challenge.

Forrás: http://online.wsj.com/public/article/SB120389566416389289.html

 

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