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If the industry and consumer expect to see quality content they are going to need to get an advertising model that works.  In 2004, filmmakers experimented with ad placement at the beginning of an online and mobile video.  These filmmakers knew the consumer might be able to tolerate a 10 second but how do you communicate a proper ad in less than 10 seconds.  I think you can, but in my experience in media the very good creators of the advertising message are very expensive people.

YouTube recently announced that it will be showing InVideo Ads as a way of associating advertising with content.  These InVideo Ads are really overlay ads that are shown while the content is being run.  The idea is a sound one.  The overlay approach is an attempt to get advertising dollars into the model to generate revenue.  For those pundits who have POO POO’d the idea the overlay model is better than showing an ad in front of a video.  The reality is that folks simply cannot tolerate having to go through a 15 second painful car ad in front of a YouTube video or any other video.  Have you ever gone and looked at a Moviefone Unscripted video?  The ad shows up at the beginning of the video and it is between 10 and 13 seconds long.  Frankly it is annoying.

For those who believe that the overlay model will not work, then they obviously have not watched television lately.  There is not a cable television program or even broadcast television program that does not float overlay ads across the bottom and corner of the program while it is being shown.  Online content companies need to experiment with a variety of ad models.

The following things are important to entertainment companies and even online IPTV:

• Compelling content
• An audience – preferably a large one.  By the way theater owners, filmmakers, and television producers know the number of people and eyeballs they need to see their production in order to claim a revenue victory.  An online TV company needs to know how big their audience needs to be.
• A way to measure or gather information about audience demographic
• A revenue model that makes everyone money

Online TV companies are no different than your typical movie studio or television programming production company.

You need to applaud YouTube’s efforts and even VideoEgg’s efforts.  Unless the online entertainment industry finds an ad model that works we will be forced to watch amateur video forever.  Look I am not one to complain I like a lot of the amateur programming but the reality is that at some point you will want to see professionally produced programming.  The Internet is already flooded with Garbage and Junk.  The viewing audience is going to start demanding better programming and that costs money.  The online experience may not be broadcast television, cable television, or a theatrical release but it is entertainment.  Like these other mediums, online TV has consumers who want to be entertained; either laughing, singing, dancing or crying.  Online TV is an element of SHOW BUSINESS.

As for not being able to monetize user generated content.  I don’t think that is true.  Have you ever noticed the relationship between the Geico Caveman commercial, the Tampon commercial and an episode of Futurama?  Ever notice the relationship between the same Geico commercial being shown at the same time an episode of Law Order SVU, Law & Order CI, Monk, and a rebroadcast of Must Love Dogs? The answer is demographic.  Forget about associating the content with the ad.  Associate the demographic with the ad.  Now all you need is a sophisticated backoffice to meter the viewing habits of the audience.  However, don’t get me wrong I don’t believe for a second that the Internet will or even ought to be dominated by amateur video.  There is enough garbage in the world so let us not turn the Internet into a dumping ground for the NO Talents and the whack jobs.

Even though American Idol is supposed to be about amateurs performing, the fact is that the ones who make it all the way to the final four all have some kind of professional training or at a minimum - intensive training done in a professional setting.  The audience loves to see some of the bad singers but in very small doses.  As for William Hung and his rendering of “You Bang”; okay he made “horrible an art but he was darn entertaining”.  I still think William Hung was a born artist.  Remember Johnny Carson?  He took delivering a joke badly to an art form – it was fun just watch him screw up the joke.  Remember “The Unknown Comic”?  His jokes were lame but darn he was fun to watch.  You want great artists?  Then pay them. The current subscription and usage model used by wireless carriers does not provide sufficient compensation to the creative artist or content owner.  Like cash, content is KING. And you ain’t going to get the content unless you pony up the cash.

Don’t let the so-called reality programs fool you into believing that people actually want to see poorly produced programming.  Every one of the reality shows is professionally produced using amateurs as the stars.  Think about it.  These shows cost money to produce and stage.  Where is that going to come from a one fiftieth slice of Verizon’s subscription fee of $4.95 per month or whatever it is now?  I doubt it.

The advantage of online video entertainment is that it is a natural fit for targeted advertising.  Imagine an ad machine that collects sufficient data about a viewer that the online entertainment company can actually place specific ads or overlay specific ads on a specific viewer’s screen.  The online environment is better positioned to gather micro-level information about each demographic.  This demographic information is extremely valuable to an advertiser.  This would take media advertising from this shotgun blasting approach to pinpoint targeting of ad placements.

Remember online videos are a new information and entertainment medium.  Online video programming is “show business” and “show business is a business”.  So bully for YouTube and keep trying.  As for VideoEgg complaining about YouTube hijacking your idea, knock it off.  If the online video/entertainment industry does not find a way (together) to push more cash through the system the Internet is going to continue to be a college experiment with new ideas and tech toys.

Another real challenge ahead will be preselling ads.  The only way to presell the ads is by collecting enough data about the viewing demographic that will make the advertiser happy to come back again and again with news ads.  This will mean a new emerging industry – do I see the next Nielsen Ratings of the Internet emerging soon?  The only way to presell an ad is to demonstrate you have customers and customers that buy the advertiser’s product.  Ever watch the Super Bowl?  Ever notice that they advertise just about any product that the advertiser is willing to pay for.  What is the demographic of a Super Bowl audience?  Unlike a regular television program it is easy to answer.  The answer is anyone – from child to ancient senior citizen.  The demographic of the Super Bowl is massive.  Pre-selling an ad at a Super Bowl is easy.  Try pre-selling for a plain old program – its hard.  This is why some kind of mechanism to measure the viewing habits of the demographic is critical.  For now its CPM.

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