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News websites take to more videos to generate revenue

News websites take to more videos to generate revenue
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First Published: Wed, Nov 11 2009. 10 36 PM IST
Updated: Wed, Nov 11 2009. 10 36 PM IST
News websites are starting to look a lot less like newspapers and a lot more like television.
CNN.com and ESPN.com are featuring videos much more prominently on their home pages, often prompting visitors to press play before they begin to read. Even The Wall Street Journal has moved its video player front and centre with a twice-a-day live newscast on WSJ.com.
A major reason is commercial. At a time when other categories of advertising dollars are shrinking, video ads are booming. News sites are adding more video inventory to keep pace with the demands of advertisers, and benefiting from the higher cost-per-thousands, or CPMs, that ads on those videos command.
The attention to video mirrors changes in how consumers are experiencing news. Major events—be it the presidential election or the death of Michael Jackson—bring a surge in video stream viewings by new users, and each time some of them stick around.
“Every watershed event leaves video more popular than before,” said Charles W. Tillinghast, the president of MSNBC.com, a joint venture between NBC Universal Inc. and Microsoft Corp.
K.C. Estenson, the general manager of CNN.com, a unit of Time Warner, said “people are using the Internet in a different way now.” “With broadband penetration becoming ubiquitous and more and more sites having this easy capability, people are expecting video to be there,” he added.
Media companies typically do not break out figures for video advertising, and certainly the video revenue pales next to search and display advertising. But the growth has spurred investment and interest in video production.
Among websites operated by newspapers, The New York Times, The Tribune and Gannett and each reach at least a million viewers a month with video streams, comScore says. The home page of The Times sometimes streams live video of events.
But video can be costly to produce, hindering some sites’ efforts to expand and leading people such as Tillinghast to predict that access to television film (like a bounty of NBC News video) is an advantage.
Beyond news sites, video is now the fastest-growing segment of the Internet advertising market. Digital video amounted to $477 million (Rs2,222.8 crore) in revenue in the first half of 2009, up 38% from the same time period in 2008, according to the Interactive Advertising Bureau.
With an estimated $5 billion in revenue in the first half of 2009, search remains the dominant segment of online advertising, but it is expected to grow only marginally this year.
Augmenting the increase in video spending is the growing acceptance of pre-roll—the once-derided ads that appear before a video plays.
“It actually works really well,” said Brian Quinn, the vice-president and general manager of digital ad sales for The Wall Street Journal’s digital network. A 15-second pre-roll “followed by two-five minutes of high-quality content is a fair-value exchange,” Quinn said.
Analysts say they expect the flow of online advertising dollars to video to continue. The research firm eMarketer Inc. projects 35-45% growth for the segment for each of the next five years, topping out at $5.2 billion in 2014. (Even then, it would hardly rival search advertising, which is projected to be a $16 billion business.)
In the five-year outlook it released last month, eMarketer said that video ads would be the “main channel” for major advertisers seeking to increase their online spending. Already, ads for companies such as Johnson and Johnson and Unilever Ltd pop up often on sites like MSNBC.com. “More and more advertisers are starting to play in the online video space,” said Jeremy Steinberg, vice-president of digital sales and business development for Fox News Channel.
News sites account for only a small portion of the 25 billion video streams counted by comScore on an average month. The firm reported almost 500 million video streams in its news and information category in September—still a substantial figure. Most of the streams occurred on MSNBC.com (162 million, according to comScore) and CNN.com (148 million).
Advertising dollars haven’t always kept pace with the growing view counts, but Quinn said video was currently the strongest ad format for WSJ.com. “I wish we had more, since we’re sold out,” Quinn said.
In September the site introduced The News Hub, a live webcast from The Journal’s newsroom at 8.30am and 4pm each weekday. When Hub is shown live on the WSJ.com home page, it includes a sponsorship mention and a companion display ad. When it is replayed, it includes a pre-roll ad. Sponsorships are sold monthly, with Charles Schwab being the current one.
The rate card for WSJ.com lists pre-rolls for a $75 CPM before advertiser discounts. Quinn said the CPM was around $50 last fall.
FoxNews.com, which like WSJ.com is a unit of the News Corp., now sells sponsorships of its daytime Web show, ”Strategy Room.”
When the show had its debut in its current form earlier this year, it included only an occasional remnant pre-roll ad. This month, as viewership increased, the show started to include TV-style commercial breaks and advertiser logos in the corner of the video screen. Fox says the 9am-5pm show gets an average of 35,000 streams per weekday.
Web executives say some clients think of online video as an extension of TV, and others think of it as an enhancement —one that allows for interactive messages and instant feedback from viewers. They acknowledge that the medium is still in many ways immature. Sites continue to disagree about the legitimacy of autoplay, a setting that starts videos automatically when a web page loads, increasing the number of streams without necessarily knowing that the web user is watching.
Web executives say that ads next to dispatches from Afghanistan normally cannot draw the same CPM’s as lighter fare. MSNBC.com has found success with lifestyle segments that are sold as a package between TV and the Web. Last month it introduced TodayMoms, a section for mothers sponsored by Wal-Mart with a TV connection on the Today show.
©2009/THE NEW YORK TIMES
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First Published: Wed, Nov 11 2009. 10 36 PM IST
More Topics: News | News websites | Videos | CNN.com | ESPN.com |