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Thursday, July 26, 2007

Video Services Search for Ad Solution

Video distribution companies are looking to mine the web's growing reserves of interactive content and create "Internet TV" that can compete with television for advertising dollars. They will only be successful if they can do a better job in tying viewing habits with buying habits.

Veoh TV, Joost, Blinkx, YouTube and are among the sites that are building channels of video content in hopes that millions of people will be tuning in each day. The challenge is building a large audience with a desirable demographic that can offset the cost of distributing video and the licensing fees.

Streaming is more costly than hosting web search because of the higher bandwidth requirements, and inserting interactive ads is more expensive today than display advertising because the technology is less mature. Therefore, the cost of content per minute of viewing time is higher.

Since "hit shows" online are going to be hard to achieve than in prime time TV, video companies have to use superior targeting and data mining (like TiVo has done)to extract higher dollars per viewer than being the pre-roll equivalent to display advertising networks. Also, while search marketing is based on keywords that now have established value, the value to advertisers of online entertainment is still in flux. Tagging video content and search the works spoken during a video (as Blinkx is doing) is also more costly than text-based search.

Veoh addressed the advertising challenge by hiring former Yahoo advertising exec Steve Mitgang as CEO. Video companies are learning quickly that they aren't in the technology business; they are in ad business and need to hire accordingly.

By John Gartner at 08:15 AM | Comments (0)

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