Eyeballs Are Great, but Revenues Would Be Better

FEBRUARY 12, 2009

Online video sites rack up traffic numbers

Google sites enjoyed more than 100 million unique online video viewers in December 2008, according to comScore Video Metrix. Google’s closest competitor in the online video arms race is Fox Interactive Media, which owns properties such as MySpace and Photobucket, the online photo- and video-sharing site.

Some 5.9 billion videos were viewed on Google sites, with its YouTube property accounting for nearly 100% of the total, according to comScore.

Nice traffic. But marketers want to know how online video hubs can generate revenues from all the engagement they are receiving.

“It’s misleading trying to equate numbers of video viewers with opportunities to make money,” said David Hallerman, senior analyst at eMarketer.

“YouTube may have the most visitors, but the vast majority of videos that people view on the megasite are not the kind of trusted content that attracts the typical brand marketer. The mindset of these marketers is protective, and placing ads against content they’re unsure of does not play out too well.”

Mr. Hallerman added, “Most YouTube streams are short-form content, generally less than 5 minutes. These brief streams can at best support only 15-second ads, or even shorter. Longer-form videos, such as full TV shows, are a more hospitable environment for the bulk of advertisers willing to spend for online video advertising.”

YouTube has made deals for longer-form, professionally created content. But even that might backfire, Mr. Hallerman cautioned.

“While the vast amount of available videos continues to attract a large audience, those short clips also create more clutter and more distraction, which takes away some of the potential value of that professional content,” he said. “In contrast, the relative simplicity of a video site such as Hulu creates a more direct connection among audience, video and advertiser.”

eMarketer projects advertisers will spend $850 million on video ads in 2009—a modest total, particularly considering that an estimated 84% of Internet users will watch online video this year.