It’s official: even as publishers recognise the demand for video, they just can’t capitalise on media’s digitech revolution. So, isn’t it time to pivot on the pivot?
A decade or so ago many industry experts believed that publishing was on the cusp of a new era. Video content, they said, would explode across the web, and media companies would enjoy a boom in advertising, including reaping significantly higher CPMs than standard display ads.
While the media seers were right about video content becoming ubiquitous online – Sandvine concluded that 65% of internet traffic in 2022 was video – many publishers are still waiting for the payback.
This disconnect, among other things, inspired Brian Morrissey, the founder behind The Rebooting email newsletter and podcast, to take stock of the state of video among mainstream media companies.
Enabled by his partner VideoElephant, Morrissey quizzed over 150 executives from media companies, mainly from the US and UK, about their video production systems, monetisation strategies and ambitions for video content.
And the results, delivered in this report, make illuminating reading.
“Publishers we surveyed see the shift to video and want to capitalise on it. 73% said increasing video ad revenue is a priority for their business,” notes Morrissey.
Publishers have sound reasons to pursue video advertising strategies. “With display being such a tough market, a lot of publishers have turned to video because there is a ton of demand for video advertising inventory,” noted Morrissey.
And yet: “A solid majority said video is a top priority, yet under a quarter said that video advertising makes up over 25% of revenue.”
A challenging disconnect
So why is video still under-exploited by media companies? Is the creation and monetisation of video too complex and difficult to scale?
Morrissey thinks that many media companies may have bet heavily on video a few years ago and not seen the results they expected, so they are wary of going big on video again.
“We saw people build up big video teams. These are very expensive and the revenue never followed. So I think there’s a once-bitten twice-shy phenomenon going on. We also found that as many as 45% of respondents outsource their video content, so there’s clearly some reticence.”
Expectations vs reality
The report also focuses on the difference between the expectation and the reality of the income that video content generates. Sure, the CPMs are much higher than standard display advertising; but, as highlighted earlier, some of this has to be used to offset the high production costs of the content.
Also, the high-quality video advertising that some media companies were expecting never materialised. Yes, some high-profile news publishers have attracted large sponsorship sums, but a lot of video advertising has been generic and, all too often, programmatically delivered.
In short, brands are making video advertising content for many different platforms, from connected TV through to social media, and simply don’t have the resources or the inclination to create bespoke content for media brands.
Besides, as Morrissey points out, many publishers don’t have the scale to sell their video inventory directly – so they end up turning on programmatic demand systems.
“At the end of the day I think this is the essential challenge facing a lot of publishers. Publishers want to have video advertising on their sites because of the higher yield. Brands pay more for video ads than they do banner ads. Far more. The problem ends up being a lot of publishers are still mostly in the text content business. Mixing chocolate and peanut butter works. But mixing oil and vinegar does not. And sometimes video in these very text environments is oil and vinegar, not chocolate and peanut butter.”
The challenge to balance your audience expectations and needs with your advertisers’ expectations and demands and that of your own business needs is a difficult act to master.
Is AI the magic bullet?
One potential solution could be the incorporation of Artificial Intelligence into video content creation. Already, a host of AI-based tools (Fliki, Synthesia, HourOne etc) exist to help media companies significantly speed up content creation and potentially scale it too.
Morrissey thinks that while AI might have its uses for improving the quality and efficiency of video content, it is no magic bullet.
“Inside every company that I’ve ever been part of, there’s always this impulse to reach for the easy button and to look for the big switch. It’s like, yeah, we’ll just turn on this switch and then a bunch of revenue will show up. And that usually doesn’t happen.
“It’s hard and it takes way longer than you think. And so we’re going to see people look to take shortcuts, that’s inevitable. It’s a human condition, it’s not a publisher condition. It’s a human condition and AI is very enticing as the ultimate shortcut. So we’re going to see a lot of people deliver bad AI-created video content with the idea that they won’t have to pay much to create it but they’ll be able to monetise it.”
Ultimately then we return to the core question. Is it time for publishers to pivot on the pivot to video and look for new ways to generate further income?
Ashley Norris has been obsessed with innovation in new media since running a high-profile blog network in the late 00s. From his basement home office in London, he writes about media business models and technology for a range of titles.
The video report is available here. This story was first published by Media Makers Meet (Mx3) and is republished with permission.