YouTube and FreeWheel grease the wheels for online video advertising

I try not to write about portfolio company news or announcements but some recent press about FreeWheel Media is worth trumpeting given the potential significance it has for the entire online video advertising ecosystem. YouTube has historically made it incredibly difficult for content owners to sell advertising against their content distributed through YouTube. Unlike traditional online advertising which is automatically delivered and optimized via third party ad servers, video content owners working with YouTube needed to hardcode the advertising or have YouTube’s ad operations team traffick the campaigns on their behalf. The integration of FreeWheel’s platform with YouTube changes these old rules of engagement for all of YouTube’s content partners. Now, using a single platform, those partners can easily and automatically scale their video monetization efforts across distribution partners, including YouTube. Some of the specific benefits of the YouTube and FreeWheel integration are:

– Greater ad format options, including pre-rolls and companion banners

– More ad targeting options, including contextual and behavioral

– Automated ad optimization across campaigns and third party ad networks

– Consistency of campaign and metrics across YouTube and other distribution points

The net result is that the online video advertising market can begin to operate more like the traditional display advertising market. Advertisers can expect consistency in delivery and metrics. Content owners can offer consistency in formats and targeting. And distribution partners can expect lower operating costs and greater sell-through. Everyone wins. And that is why all of the players in the online video ecosystem should be paying attention to this news and coming announcements from other FreeWheel partners and customers, like The YouTube-FreeWheel announcement represents a major tipping point for the online video advertising market and the ability of companies to turn online video in a viable business.

The short form vs. long form video holy war

As a board member of a company in the online video advertising market (FreeWheel), I regularly get to chat with many video content producers, owners and distributors. Without fail, the fervent “holy war” between short form and long form video zealots arises as a top of conversation. Without getting into the nuances of the debate, the short formists argue that the web audience wants its video in bite-sized chunks, unlike a traditional television viewing experience. They inevitably point to the popularity of YouTube as evidence for their perspective. The long formists maintain that short form video only dominates online video viewing because long form content has been slow to come online. Of late, long formists have cited recent data from Nielsen that shows the growth in the online video streaming of Hulu. Neither side seems willing to open their minds to the possibility that there might be a little grey in their black and white worlds.


I’ve found religion and my faith lies with the availability of high quality online video of any length. The only thing that matters online, like across all media channels, is the value that someone gets from the content. There are vast audiences for both books and magazines, arguably the long form and short form, respectively, of the print world. On television, I can get my comedy fix from 23 minutes of Seinfeld or from short sketches on Saturday Night Live. Why can’t the same coexistence of content be true for online video? After all, I’m just as happy to watch two minutes of low production value Riegel & Blatt as I am 43 minutes of Lost in high definition because each video provides me with (very different!) entertainment value. Content producers should not be occupying themselves with discussions about the appropriate duration of online video. Instead, the path to salvation is will be found by focusing on creating quality content and on working to get that content distributed, discovered and monetized.    




Will there be a Google of video search?

Over the past few months I’ve spent time with a large number of companies attempting to solve the video search problem.  I think there is plenty of evidence to suggest that the consumer video search and discovery experience could be improved.  However, one issue that has been gnawing at me is whether video search can be a sustainable business.  If video search as a business depends on advertising as its business model, I have my doubts.  I don’t believe that advertising can be nearly as effective a monetization vehicle for video search as it is for traditional search.  From my perspective, there are many issues to be overcome, but some key issues are as follows:

1) Video searches are largely not commercial in nature. When searching for video, most consumers are looking for free entertainment content to be viewed at that moment. Based on the data that I have seen from various video search companies, my guess is that far less than 5% of queries have any commercial intent. As an example, below are the top 10 searches from June 2007 (representing about 28% of all queries) for one of the largest video search companies.

  • paris hilton
  • SEX
  • u2
  • angelina jolie
  • Akon
  • mya
  • sexy
  • ciara
  • t-pain
  • beyonce

Compare this data to traditional search, where Google delivers ads for the 40% of queries that it thinks are commercial in nature.  The volume of video searches that have commercial intent and could be monetized is likely to be limited. 2) Advertisers are afraid of user-generated content.  UGC is still the most highly consumed and available online video content.  Video search results are bound to contain UGC and few advertisers are willing to risk being associated with inappropriate content (e.g., violence, pornography, defamation).  Without appropriate filters and safeguards in place, big budgets are not going to be allocated to video search.

3) There is no standard solution to monetizing online video. CPC text and CPM banner advertising, which have been used successfully to monetize traditional search and webpages, respectively, do not effectively monetize online video. When a consumer is seeking video content, it is easy for her to ignore non-video ads as they are not the media type that she is seeking.  While numerous startups are tackling this problem by developing new ad units (e.g., overlays, bugs, post-roll) and targeting technologies (e.g., speech-to-text, audio analysis, computer vision), advertisers are not going to allocate large budgets until effective, standard advertising units are available in significant volumes. 

I look forward to seeing how the video search monetization problem gets solved.  Given the trends around online video consumption, someone is going to crack the advertising nut or figure out how to use search as the hook for another form of monetization.