Referring to the online revenues generated from March Madness, Leslie Moonves, CEO of CBS, stated:
“Made $250k in revenue the first year; it rose then to $4 million and then $10 million. Now, this year, March Madness will give us $23 million in advertising, which fits into our philosophy: it’s content that we already have on TV, added to the internet.”
How does that stack up compared to the benchmark of online video ad sales in the US. Check it out:
Clearly, the increase in revenues from March Madness far outpaced revenues from video advertising as a whole.
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Back to the topic:
Superficially, this implies that indeed, premium content is the place to be… and while that makes me happy as founder of WatchMojo.com, that is over-simplifying it, big time.
Why?
Comparing Apples with Oranges
For one, March Madness generated revenues from subscription/downloads and advertising. While CBS has wisely decided to open up the content for free, in an ad-supported environment… those historical prices hailed largely from subscriptions and paid membership fees (I could be wrong on this, but if my memory serves me right, March Madness was historically behind closed walls).
Of the ad revenues, CBS probably generated the bulk of those revenues from sponsorships, text ads, and good old fashioned display banner ads…
Mistake #1: What Accounts for Video Advertising
So admittedly, when we compare March Madness’ revenues for CBS with online video ad sales in the US, we’re comparing apples with oranges.
Moreover, incorrectly, analysts and pundits usually look at pre, mid and post-rolls as the bellwether to gauge online video revenues. I think this is potentially the single biggest mistake and misconception in the segment. After all, if you watch a video you do not scroll down, so the companion ads placed alongside the video player hold much more value than a similar banner ad in an article. Hitherto, ad buyers argued that the premium in that price derived from the pre-roll to which the companion ad was attached to, but that is a false premise because most users tune out of pre-rolls much the same way we became immune to pop-ups and pop-unders.
How are them apples doing now?
Mistake #2: Performance-Based Metrics Will Lead the Way
Another mistake analysts make is to argue that CPA (or any other performance based metric) would work with video. I’ve covered this before, but in short, when consumers watch video, they press play, lean back and watch the clip in question, hand off mouse. The propensity to click is extremely low, whereas alternatively when consuming text articles, we scroll down, hand on mouse, ready to pounce on a text link… and increase CTRs in the process.
Difference between Search Queries vs. Video Streams
The reason for this, mainly, is simple: while search queries convey intent, video streams convey interest. Performance based marketers care about the former, branded advertisers care about the latter… since the latter will drive online video advertising, place your bets accordingly.
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