Delve Networks will conduct a free live webinar on Friday, July 23, presenting the advantages and disadvantages of various online video monetization models. An on-demand video of the webinar is presented below.

Introduction to Monetizing Online Video
Presenter: Reed Terry – Director of Marketing: Delve Networks
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Transcript of ‘Introduction to Monetizing Online Video’

There are many different monetization models publishers are adopting to profit from video content. During this webinar we will discuss 3 of them—pay-per-view, subscription-based services, and advertising supported content.

Some publishers will choose to monetize their videos as downloads. In this case a user can pay a fee for the video and then will receive a link to download a copy of the file itself. Pay-per-download works particularly well with content that the user may want to transfer to other devices like an iPod, video player, mobile phone, or another computer. This option also allows the user to access the content without being connected to the Internet. Once the user pays for the download, they own that file and can do with it what they please.

The Pay-Per-View Download monetization model has a number of advantages to the consumer: 1) You own the video – Much like owning a DVD, once you have a downloaded movie, you can play it over and over and over. When my children were young, I was bewildered by the fact that they could watch a movie several times within a single week and if they really like it, they will watch it several times within a single day. 2) Can be played anytime 3) And you don’t need to be connected to the Internet – Again, just like owning a DVD, you can watch your downloaded video anytime and anywhere. And since the video is on your hard drive rather than on a DVD, you don’t have to deal with the annoying DVD noise as the drive spins up and down. 4) Can be moved to any device – My granddaughter likes to watch Disney movies on her mother’s iPhone when they are traveling in the car, or anywhere she needs to be entertained, so this is a great convenience.

Pay-per-view download offers a clear advantage to the publisher; A single transaction and you are done. Analytics and revenue recognition are pretty straightforward when someone purchases a single video. One disadvantage to the publisher is that the downloaded video file can be shared illegally if you have not enabled file level protection.

Pay-per-stream allows viewers to pay a fee to have access and view a video stream. This model is often used for live events however it is not limited to live events and can also be used with pre-recorded on-demand content. Typically, in this case once the
stream has been completely viewed the user is unable to watch it again without paying another fee. Some publishers may allow the user to watch the stream again for a specified time limit—essentially renting the content much like people rent movies today.

Pay-per-view streaming has many advantages to the consumer: 1) It is generally more affordable than a downloaded video due to the single use or limited time use scenario. Since a publisher assumes that a downloaded video will likely be viewed by many, they will price them higher than a streaming video that will likely be viewed by a limited audience. 2) Streaming video can be watched instantly, even at HD quality so the user doesn’t have to wait for long downloads that could potentially become interrupted. 3) If the online video platform provider supports dynamic streaming with their video players like Delve Networks does, then the player delivers the appropriate bit rate based on network speed and computer type. This ensures the best viewing experience for the consumer regardless of connection or processor.

Pay-per-view streaming offers publishers the advantage of protecting the intellectual property of the video since the user cannot download the video file for sharing. A disadvantage to the publisher is that they typically have to offer the video at a lower cost to the consumer compared to a downloaded video due to the limited time use scenario related to streaming video.

Here are a few tips to be successful when monetizing videos with the pay-per-view model: Have compelling previews of content. Much like watching movie trailers in the theatre, you want to know what the show is about before you pay your admission. Provide users a way to know what they are paying for so that is assures them that they are making a wise purchase. Just like the movie studios do, be sure to put the best clips from the video in the trailer so viewers get excited to see the full video.

Charge a fair price. If you want users to continue to come back and make repeat purchases make sure you are charging a price that is aligned with the user’s expectations. Loyalty also equals viral marketing.

One of our customers monetizing through the pay-per-view revenue model is Yoga Today. They produce instructional videos targeted to health conscious adults. On their home page they have an assortment of free videos that you can preview.

You can also navigate through their library of videos to find specific yoga instruction. This example preview lasts 1 minute and 18 seconds and streams at a low bit rate. To the right you can see that you can purchase this video for $3.99. This gives you access to the entire 57 minute video in high-definition video.

Another way publishers are monetizing video is by offering a subscription-based service.

Similar to how cable television works today; viewers pay a monthly fee (this could also be yearly or seasonal) for unfettered access to all of the content the publisher has to offer. The subscription could offer either downloads or streaming video.

Consumers find monetizing videos using subscriptions to be advantageous because they can access a greater selection of content than purchasing each piece individually which typically translates to a better value. Subscriptions also often include unlimited use of the videos so consumers can watch a video multiple times without incurring additional costs.

One of the main reasons that publishers use the subscription model is that they are able to justify a larger fee versus selling lower priced single videos.

Another benefit of monetizing through subscriptions is that it allows publishers to have a constant revenue stream from subscribers throughout the duration of their subscription agreement. This makes revenue more predictable than the pay-per-view model since it provides monthly recurring revenue.

Using the subscription monetization model can also help increase brand loyalty and stickiness to the website. Since subscribers will likely return repeatedly to the site, publishers have an ideal opportunity to build a positive relationship that may translate to the subscriber recommending the brand to others, and/or purchasing additional products.

Again, with all monetization models for video content, give users the ability to see what they are going to get. Some sites have found it compelling to offer teasers of content—either in the form of short previews or a selection of full-length content in limited video quality to entice new users to purchase a subscription of the fuller and richer content. You can also do this by offering a trial of the service, such as “one week free”.

Set up subscriptions to auto-renew. This provides a hassle free way for current subscribers to continue to access the publishers content and gives the publisher a more predictable stream of recurring revenue. Be sure to provide a continuing value so you can justify the ‘assumptive close’.

Continue to refresh content. If a user is paying for a monthly access to a service it is important that content will continue to be updated and refreshed. Otherwise subscribers may become tired of what is available and are more likely to cancel their subscription.

One of our customers that monetizes their videos through subscriptions is PlaySportsTV. They produce training videos targeted to youth sports. Notice that we are on the ‘Training Videos’ tab on their home page. To see video samples, you select the specific sport that you are interested from the picklist.

You are then brought to this page that offers previews which are specific to your interest. Right next to the video player they list the price and benefits of subscribing.

One of the most predominant and easy ways of monetizing content is through advertising. Ad supported content is commonplace throughout websites offering video. Part of the reason advertising as a source of revenue is so popular is that there is no cost to either the publisher or the viewer; the cost is fully burdened by the advertiser.

Much like standard website advertisements, such as banner ads or text ads, there are multiple types of ads that can be used in conjunction with video. An ad that appears during the play of a video is called an In-stream Ad. There are basically two types: Linear Video Ads and Non-Linear Ads. Separate from the video, a companion ad banner may also be used.

A in-stream linear video ad is basically a video commercial. This type of ad takes over the video experience, forcing the viewer to watch the complete advertisement before being allowed to view the rest of the video. No doubt you have seen these types of ads when viewing news videos or TV reruns on Hulu.

The advantages to the consumer of linear video ads are that they usually appear at the beginning of the video, so once the ad is done, the rest of the video usually plays without interruptions. The disadvantage is that the consumer may have to sit through a 30-second spot before getting to what you really want to see. This is not much of an issue for long form video, but if the consumer is watching multiple short form segments and has to sit through a 30-second spot at the beginning of each video, you may try their patience to the breaking point.

Linear video ads typically appear at the beginning of the video as a pre-roll therefore deliver higher impression rates than non-linear ads. So you get paid upfront! The disadvantage is that they are more obtrusive to the user experience and cannot be used as frequently as an non-linear ad during the length of the video.

Non-linear ads are typically overlay ads that appear as a small banner or frame on the top or bottom part of the video and will contain an advertisement comprised of text and sometimes images. A non-linear ad could also be a little Flash application like a small game or some other kind of interactive content. We will limit this discussion to overlay ads. No doubt you have seen these types of ads when viewing videos on YouTube.

The advantage of overlay ads to the consumer are that the video starts right away versus waiting for an in-stream ad to finish playing, this translates to higher viewer satisfaction particularly when watching multiple short-form videos. The disadvantage to the consumer is that overlay ads may appear frequently during the video, which obscures the screen and causes distractions.

The advantage of overlay ads to the publisher are: 1) Viewers tend to tolerate overlay ads more that in-stream and 2) Overlay ads can appear more frequently during the video without being too disruptive compared to in-stream. The disadvantages to the publisher is that overlay ads can be put away before the viewer even reads the ad. Plus, overlay ads are generally less persuasive than in-line ads due in-line ads use of both video and sound.

Tips on using the advertising monetization model include: 1) Higher quality content earns more money. Having niche content or high quality content will be more attractive to most advertisers and will typically garner higher CPM rates. For example, the quality of user generated content can be very hit and miss which makes advertisers a bit wary thus making UGC difficult to monetize. Higher quality tends to generate higher revenue for two reasons: people tend to be more engaged and consume more of the content, and because advertisers prefer more targeted content and as a result are willing to pay a higher CPM rate.

Another tips for using the advertising monetization model is to use multiple Ad Networks to fill inventory. While some publishers may choose to sell their own inventory to advertisers, there are others that leverage Ad Networks. Delve offers integration with AdapTV, AdTech, OAS or 24/7 Open Adstream and Tremor Media. By using multiple Ad Networks, a content publisher is able to maximize the amount of their inventory that is filled with an advertisement (so whenever there is an opportunity to run an ad, there is one available). There are lots of tools that allow publishers to utilize multiple ad sources, and many even give the ability to choose the priority for placement.

Another tips is to mix ad types. Publishers are not limited to use exclusively in-stream or overlays ad within a given video. Both ad types can be used on the same piece of content. By using multiple ad types within a particular piece of content a publisher will be able to maximize their revenue.

We will touch briefly on companion ads. I think the majority of you already understand this type of ad unit. Companion Ads are commonly display or text ads that come in a number of sizes and shapes and typically run alongside or surrounding the video player. The primary purpose of the companion ad is to offer sustained visibility of the sponsor throughout the video experience. Companion ads may offer click-through interactivity and rich media experiences, such as expansion of the ad, for further engagement opportunities.

Our customer GreatSchools, which produces videos that offers ideas and tips for parents on ways to help supplement their child’s education, is an excellent example of a way to monetize using pre-roll ads with a matching companion banners.

Our customer Pitchfork.com, an alternative music news and reviews website, incorporates pre-rolls and companion ads with their music videos.

Our customer Le Gourmet TV, which produces cooking instructional videos, simply use banner ads from the Google Content Network as a method of monetizing their online video content. This strategy is great if you are concerned that pre-roll or overlay ads may interfere too much with your viewers experience.

Our customer Buckmasters, which produce videos offering tips and tales about deer hunting, are a good example of pre-roll ads. Buckmasters uses our built-in ad server to display these ads. The big advantage of using our ad server is that you receive 100% of the revenue coming from the ad rather than sharing it with one of the ad network partners.

Monetization Online Videos Conclusion:
Pay-Per-View: A single transaction and you’re done
Subscriptions: Provides more predictable monthly revenue
Advertising: Revenue burden shifts to advertiser