Lightspeed Slow to Grasp Video Monetization
Jeremy Liew from Lightspeed Venture Partners wrote on the company blog today that “video may not be the best way to monetize online.”
Unfortunately, his basic premise - that all web content is created equal - is just off base. Making a comparison to the number of ads a user would see in 5 minutes of random web page browsing vs. the number of ads you’d see watching one 5 minute clip of video makes little to no sense.
Suppose that instead of watching a video, that user spent the same five minutes looking at regular web pages instead. Comscore says that the average time spent per page for the entire internet is about 0.7 minutes (April 2007 data). So in 5 minutes they would have seen 7 pages. Since the average webpage has multiple ad units (say 2), they might have been exposed to 14 ad impressions in those five minutes. So even if a video ad unit had a 5-10x pricing premium, the site might still have generated more revenue from regular web pages in the same amount of time because they would have served 14x more impressions.
This effect is more pronounced if users watch videos for longer (e.g. long form programming) or if they churn through web pages quicker (e.g. picture galleries). Now, of course, the visitor might not stay a full 5 minutes if they were not watching video, so this may not be an apples to apples comparison. But it bears thinking about. Sites focused solely on online video may be missing a revenue opportunity.
While the data he cites is accurate, his conclusions don’t take into account the difference between “being exposed” to an ad vs. actually “seeing” an ad or “watching” the ad. First, there are definitely more than 2 ad units on a page. Second, some of them are “below the fold.” Third, and most importantly, you can ignore the ads while reading the content.
With streaming video, you can’t avoid a pre-roll ad if you want to see the content. While we advocate that publishers use pre-roll wisely, and don’t serve :30 ads in front of crap content, a well used pre-roll is incredibly valuable. You have the user’s undivided attention. You more than likely have some kind of companion banner ad unit. And you “own” that user for most, if not all, of their video experience. Simply put, video content provides much better advertising opportunity, especially good video content.
Sure, the majority of online video content isn’t good, and a ton of it simply shouldn’t be monetized. But there are millions - billions - of unmonetized video streams out there from professional and semi-professions production companies that are perfect branding vehicles.
Sorry, Mr. Liew, but I think you are missing the big picture here. But we’d be happy to discuss it with you.
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