{"id":350715,"date":"2010-02-22T18:28:21","date_gmt":"2010-02-22T23:28:21","guid":{"rendered":"http:\/\/gigaom.com\/?p=100811"},"modified":"2010-02-22T18:28:21","modified_gmt":"2010-02-22T23:28:21","slug":"where-on-earth-is-the-online-video-arbitrage-model","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/350715","title":{"rendered":"Where On Earth Is the Online Video Arbitrage Model?"},"content":{"rendered":"

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\"\"<\/a>On the text web, arbitrage has become the word of the day as whole ecosystems have sprung up to optimize and monetize the link economy.\u00a0 But when it comes to online video, the arbitrage model is failing badly.<\/p>\n

Whether it’s buying a keyword for a buck, and making $1.02 on each visit, or buying a shopping link for a quarter and making a product sale for a few pennies more of profit, whole online ecosystems have sprung up to optimize and monetize pay-per-click and the search engine- and display-based arbitrage models. Video, though, has yet to find a profitable niche based on arbitrage.<\/p>\n

It’s not for lack of trying, though.\u00a0 The online video landscape is littered with companies that tried to buy their way to big audiences, yet failed.<\/p>\n

Take Veoh, for example.\u00a0 I was assured by someone on the inside that the company routinely spent big bucks to drive viewers to its videos, yet couldn\u2019t recoup<\/a> the investment<\/a> with advertising or product placement.\u00a0 I\u2019ve had the opportunity to look at the books of a few other failing companies in the space, and seen a similar story. Big quarterly marketing spends lead to big show views \u2013 right up until the money runs out.\u00a0 Turn that spigot off, and the traffic disappears too.<\/p>\n

The problem with using pay-per-click or display to drive viewership is that the economics are still out of whack. Take YouTube, for example.\u00a0 YouTube has a form of pay-per click advertising that you can use to drive viewers to your videos.\u00a0 Unfortunately, you have to spend at least a penny per click, which works out to ten dollars for every thousand views.\u00a0 In practice, I\u2019ve found that you need to spend more like five cents to get any meaningful action \u2013 and that means you\u2019ll need to make at least a $50 CPM on any overlays or pre-rolls you might run.\u00a0 That\u2019s not likely to happen very often, given the CPM (cost per thousand impressions) pricing of most video advertising.<\/p>\n

In fact, it looks like bottom-of-the-barrel CPC (cost-per-click) marketers have already flooded the platform anyway, driving the price of viewership campaigns through the roof.\u00a0 For example, head over to YouTube and search on Olympic Skier \u201cJulia Mancuso\u201d. I just initiated a paid campaign there to try and drive views to our new Digg<\/a> Dialogg<\/a> interview<\/a> with the sexy star.\u00a0 I\u2019m bidding .05 \u2013 or a $50 CPM, which is more than what I\u2019ll bring in with any pre-rolls or overlays that I\u2019m likely to serve.<\/p>\n

Yet I\u2019m consistently outbid for ad placement by Visa, a video featuring \u201cThe Hottest Girls of the Winter Games 2010\u201d, and, inexplicably, a video helping you repair drywall<\/a> as well as one hawking a gadget that\u2019s guaranteed to cure bad breath<\/a>.<\/p>\n

We\u2019ve tried a wide range of other arbitrage-style viewership promotions, from Facebook widgets to SEM, but none deliver profit.\u00a0 And we\u2019ve taken a pass on many, many more, priced at well over $100 per thousand views.<\/p>\n

However, there\u2019s a new, sneaky arbitrage model making the rounds, one that seems to deliver real results.\u00a0 It involves buying up a wide range of super-cheap\u00a0 300 x h250 display ads \u2013 typically for well under a dollar CPM \u2013 and then auto-playing pre-rolls and other video into that ad unit.\u00a0 This actually seems to work, in many cases, because the auto-play video can be hard for users to find, and shut off, before enough of the pre-roll is served to constitute a view.<\/p>\n

It\u2019s annoying, but lucrative.\u00a0 Video ad networks routinely deliver remnant pre-rolls for $5 CPMs, and even after ad serving costs, revshare and the inventory payout to the serving web site, you can generate enough real money to eke out a profit.<\/p>\n

But in the end it\u2019s duplicitous and ineffective.\u00a0 Web sites serving these auto-play video ads are delivering a terrible experience to their site visitors.\u00a0 Advertisers paying for these impressions are being misled as well, as most of them are unasked for, and angrily terminated by the waylaid web surfer.\u00a0 And now the IAB (Interactive Advertising Bureau) is getting involved to try to curtail \u2013 or at least pull the curtain back \u2013 on this shady practice.\u00a0 Back in December the industry trade group issued an updated set of guidelines<\/a> requiring web sites to disclose details on auto-play video when it happens.\u00a0 And this is just the \u201cfirst part of a broader auto-play initiative by the IAB\u2019s Digital Video Committee\u201d.<\/p>\n

Maybe it\u2019s wishful thinking, but I believe the IAB will move to outlaw, or seriously curtail autoplay video ads when they are viewed out of context.\u00a0 Because even though I\u2019m all for figuring out a successful video arbitrage scheme, it\u2019s simply not right when built on underhanded, sneaky and deceitful tactics.<\/p>\n

What do you think?\u00a0 Have you figured out an honest video arbitrage system that works?\u00a0 Do you believe in auto-play at all times?\u00a0 Post your thoughts in the comments.<\/p>\n

Jim Louderback is CEO of Revision3.<\/a> He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.<\/em><\/p>\n

Related Post From GigaOM Pro:<\/strong> Not Your Grandfather’s Streaming Video Business<\/a>.
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On the text web, arbitrage has become the word of the day as whole ecosystems have sprung up to optimize and monetize the link economy.\u00a0 But when it comes to online video, the arbitrage model is failing badly. Whether it’s buying a keyword for a buck, and making $1.02 on each visit, or buying a […]<\/p>\n","protected":false},"author":5755,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-350715","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/350715","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/5755"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=350715"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/350715\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=350715"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=350715"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=350715"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}