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Video’s Inventory Crisis

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There's said to be about 650 million websites on the planet, growing by about a million a week. That's one for every 3.7 Internet users. If we translated that to traditional media, it'd be like Australians having a choice of 6 million TV channels.

No wonder, then, that there's a surplus of online display advertising. Sure, not every site accepts advertising, but an increasing number do. Many bloggers now are making enough money from it, some getting enough to cover their daily coffee allowance. With open-source websites popping up every day, the situation is only going to get worse – soon it'll be a coffee a week.

In reality, there's a massive oversupply of display inventory. Automated trading platforms haven't helped, arguably pushing the price down even further. Google started the trend, of course. Their display network serves about 6 billion impressions a day and some people claim to run successful campaigns for as little $1 per thousand.

Arguably, video is at the other end of the scale, particularly here in Australia. Unlike web pages, there are barriers to entry. Creating engaging editorial content requires talent and a budget. Sure, 4 billion YouTube videos are watched every day and, we're told, an hour of content is added each second. But there's a long, very thin tail. Some videos go viral, most remain sadly neglected, watched by just a few. And many advertisers want to steer away from those after all, who knows what you are putting your name to.

So there just isn't enough video to meet the increasing demand from advertisers. That's keeping prices high, which might be a good thing for those with content, but it's bad for the industry. It makes online seem prohibitively expensive compared to traditional video channels, where you know all content is of a certain quality.

Yet the opportunity is huge. If the lack of high quality local inventory issue is addressed, online video is a dream for advertisers. It offers sight, sound and motion, all targeted at the right segment, with the opportunity for interactive engagement. It is advertising Nirvana. If only the content existed.

This presents a real opportunity for established video publishers. If they can create more online opportunities, revenue will rise. The CPM will probably fall (a little), but the share of the pie is there for the taking. Certainly, the demand for expert production values will never see oversupply creating the crisis levels of online display.

It might take a few years, but equilibrium will be reached. Publishers will get smarter at creating video content to significantly improving their advertising yield – and programmatic trading will ensure advertisers achieve the best price and effective delivery through multiple channels.

Meantime, anyone with a video camera and a story to tell, get to it. Your country needs you.


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Guest Monday, 24 October 2016