Readers of TechCrunch know the blog is focused on start-up companies, so the overlap between the subject matter there and the subject matter here is relatively small. But this morning there’s a post up from Erick Schonfeld that has everything to do with Motorola’s business and the business of the video industry as a whole.
Quoting stats from Motorola partner BlackArrow and from other industry conversations, Schonfeld points out that advertisers still make ten times as much money by advertising on TV as they do from advertising through video online, even when the audience size is the same. Given that projections show there will be roughly equal audiences for VOD and online video by 2010, which user-controlled platform do you think will rake in the most money over the next couple of years?
The biggest advantage the online video industry has to exploit is its ad targeting ability. It’s easier to sell ad inventory when you can target viewers among likely buyers of a product. But of course the TV powers that be, specifically cable and telco providers, are working to close that advantage gap. It will take time for operators to roll out advanced advertising platforms, but if they’re smart, that’s one of the areas where they’ll keep investing… even in a down economy.
Online video has been a remarkable gift to consumers, but other than pulling in dollars from new high-speed Internet service tiers, no one has found a way to make real money on it yet, which is bad news when the economy is in trouble. On the other hand, operators have landed on a whole new revenue-generating platform with VOD. Today it’s just a platform. Add in targeted advertising and you get the money-making side of the equation.