Video Insider: All Great Internet Companies Eventually Build Or Buy a Video Ad Network
All Great Internet Companies Eventually Build Or Buy a Video Ad Network by Tod Sacerdoti, Thursday, December 10, 2009
Lately, I've been looking into the evolution of successful Internet companies. How did they succeed? Which factors were the game-changers for them? Earlier, I wrote an article that addressed a few of these issues, where I dove into why many successful Internet companies build or buy an ad network.
Being in the online video business, I began to wonder: Is the same true for video networks? I think the answer is yes. Here's why:
1. The "big TV budgets" all great Internet companies are fighting for are made up entirely of video advertising. Sometimes the most obvious points are the hardest to see. Video advertising is the preferred ad unit for most major marketers, so as budgets continue to shift, video demand will increase. The research and data are undeniable; video outperforms every branded ad unit on the Web. The only issues in the market are scalability and targeting, which will eventually be solved.
2. All great Internet companies will create video content, use video advertising as a form of monetizing non-video content, or sell ads targeted to their users on other sites with video ad inventory. Fundamentally, the Internet is becoming a video medium and online video advertising is an engaging and rapidly growing category. No powerful publisher will be selling in the market without a video ad offering. As video grows as a piece of the overall ad pie, every major player will fight for their slice.
3. Video networks will be larger than the great internet companies until they build or buy their own video networka. The same phenomenon that was observed in display advertising (ad networks becoming bigger than the large publishers) is happening now in video advertising. Last month, six of the top 20 video properties were video ad networks, according to comScore's VideoMetrix report, and within the next 12 months, video networks will likely be the majority of the top five properties. Only YouTube will hold its position, and I would argue it has already built a video ad network of its own.
Obviously, the timeline for this video ad network evolution is likely much longer than it is for display (although many great companies have already made significant moves in the display arena -- Yahoo, Facebook, LinkedIn, Fox Interactive Media and Cox, to name a few). As a result, it is hard to know which steps to take today.
My advice for Internet companies is to focus on video inventory creation or video advertising strategy. If you are able to create meaningful inventory of your own, or if you are able to build a powerful video media network, then there will be many ways to win in the marketplace.
Alternatively, you can simply focus on becoming a Great Internet Company in your own right. If you succeed, you will be able to make your build vs. buy decisions and determine your own timelines. You can even delay focusing on video entirely, as Facebook has done. The minute Facebook decides to open the video spigot, it will quickly be the largest streamer in the world. Don't forget, Flickr used to be the default photo site, as YouTube is for videos today.
Sacerdoti is the CEO and founder of BrightRoll, a branded video advertising network. Under Sacerdoti's direction, BrightRoll has grown into a premier video advertising network, having served billions of ads on behalf of the world's leading agencies and their clients and executed campaigns on more than two-thirds of the top 100 online media properties in the U.S.
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