Who am I to say Robert Scoble and Mark Cuban are wrong?

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Just read two excellent posts on the advantage of long term video. I first read Robert Scoble’s analysis who then pointed me to another good article by Mark Cuban.

Robert says that long video will win over short video big time. The reason for this is engagement. If someone is willing to sit out a long video, he must be engaged with the topic:

But why is YouTube going longform, which is what Silicon Alley Insider just reported?

Easy: it’s much tougher to monetize short videos of, say, kids doing skateboard tricks, than it is to put some ads into a long video like the ones I do at FastCompany.tv.

Advertisers also will pay a lot higher rates for those long-form ads.

Why?

Because someone who’ll watch a 30-minute video is HIGHLY ENGAGED. They are far more likely to become a customer than someone who just watches a two-minute entertaining video.

Robert is making a valid point here. Watching a video on the web for 30 minutes needs engagement. So assuming that the people that watch them have a genuine interest in the topic at hand is probably a good guess.

Mark Cuban approaches it from a bit of a different angle. He notes that Hulu is kicking YouTube’s ass in two ways. First, Hulu uses YouTube as a free distribution platform for short teaser video’s which are pre- and postrolled with Hulu bannering. This free service of YouTube drives traffic to Hulu. But more importantly, Hulu can actually generate revenues on each video on the Hulu Platform:

Which leads us to the one area, OK lets say two areas that Hulu is just stomping all over Youtube;
1. Revenue Per Video
2. Revenue Per User

Hulu has one HUGE advantage over Youtube, it has the right to sell advertising in and around every single video on its site. It can package and sell any way that might make its customers happy. Youtube on the other hand, has that right for only the small percentage of the videos on its site that it has a licensing deal with. For probably 99pct or more of the videos on the site, Youtube isn’t supposed to know what they even are.

Mark is probably right about that too. It sounds like the best business model a video service can have.

The thing that nags a little here for me though is that both Robert and Mark are talking from the service provider’s point of view. Robert produces video’s for Fastcompany and notes that they can monetize advertisement much better on those video’s because of this engagement of the user. Mark syas basically the same thing. But what about the user?

Just because he is engaged and is eager to watch a video for 30 minutes or more, that doesn’t mean he is also interested in watching advertisement. From the perspective of the investor, the entrepreneur and the advertiser it seems obvious that the engaged watcher is the to go for with profiled and contextual advertisement. But for the user point of view, it might just be someone interested in the video, not in possible ad harassment to go along with it. We have seen this business model a long time ago BTW. It’s called tv, and most of us use a TiVo-like service or the remote control to get around those advertisements.

It is such a difficult balancing act. Advertisement and customer engagement. I am convinced that on-line advertisement ONLY makes sense if the advertisement itself provides the watcher with value. Robert provides the perfect example of this.

Oh, and don’t even start thinking about the buying process. If you do, you’ll see why Gary Vaynerchuk is the most brilliant marketer out there right now for starting Wine Library TV. I’m going to do a whole post soon just on what Gary is getting that even Google and Facebook aren’t getting.

Watching someone talk passionately about wine (or food in general ;-) ) makes anyone remotely interested in the subject hunger for it. So providing wine advertisement there makes perfectly sense. It monetizes the direct need of the user to get his hands on a great bottle of something.

But that example doesn’t hold for a lot of the more tech oriented video content Robert produces. People might enjoy watching them, they are produced with fun, passion and craftsmanship. But I doubt it makes the user crave for something immediately. Technology makes us gadget lovers tick, but it hits the fourth step in the Maslow pyramid. Wine or food addresses our basic need for survival. No competition there.

In the case of Hulu it’s worse. There are engaged watchers there, but these are not targeted the way Gary Vaynerchuk’s audience is targeted. These are TV lovers, they merely switched their behavior to an on-line environment. And when they get advertisement that in itself doesn’t provide the watcher with any value? They will either use the remote control or get a TiVo like service to get rid of the advertisement.

So, from the perspective of the advertiser and the service provider I get the business model. But from the user’s perspective? Who am I to say Robert Scoble and Mark Cuban are wrong?

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10 Responses to Who am I to say Robert Scoble and Mark Cuban are wrong?

  1. Well, if you invest in watching a video, for, say, 20 minutes, aren’t you pretty likely to sit through a short ad? Compare that to watching a short funny video? I just watched one of those and if there was an ad there I’d just close it up. Why? Engagement and commitment.

    Also, the companies that are on my shows tell me that they see a LOT of adoption behavior from the videos. So, that tells me that even geeks will try something out based on seeing a video about that thing.

  2. alan p says:

    The issue is more that we have established ad methods for long form video – short form is a new media and does not yet have an established Ad model – which is a problem if you need to make money from it now.

    I also suspect if Gary Vaynerchuk started advertising industrial plonk (the sort of wines that pay for advertising) he’d be sending mixed messages to his audiences. Far better to advertise complementary items.

  3. @Robert, sitting through a short ad isn’t exactly engaged from the watcher’s perspective is it? He is engaged with YOUR video, but less likely to be engaged with the ads that come along with it. I can BTW imagine that there will be some adoption behavior form the people that watch your stuff, really I can. But it is a difficult balancing act I bet.
    In the case of Hulu, I don’t see the added value at all, except for the advertiser. It’s just TV with ads

  4. @Alan P I think Gary is doing really well with his format. Engaged customers, high (or low depending on the way you look at it) scoring on Maslow. He is a smart guy, in a sense translated the cooking tv format to the web successfully (he added distribution!)

  5. OK, there is a long discussion about this post going on right here if interested:

    http://tinyurl.com/646s8o

  6. alan p says:

    I wasn’t arguing re the format, I was discussing his Ad options. For example today he is reviewing good Austrian red wine – to stick say Gallo Ads around it would be a travesty ;-)

  7. First of all I think Robert will find very few takers to sit through a 30 minutes video.

    I am not saying that there are none, but very few. I think I must have watched 10 long videos in all the time I been on the Net, and that is since 2000.

    I will not watch one unless the topic really compels me.

    I do watch many 2 to 5 minutes videos.

    Second the best advertising model is Viral. This holds true for advertisers and the consumers.

    I rather watch someone blowing up a Coca-Cola machine than a stupid one minute add about Coca-Cola.

    Coke and Nike have learned this long time ago. Now, how can Youtube moneterize this is the question!

    I personally think Fastcompany.tv business model is FAIL, but let Robert prove me wrong.

  8. @Igor I can’t say anything about the success of Robert’s shows. he is satisfied with them so he probably gets enough people to sit out the whole thing. His former boss John Furrier is also positive about long video (a lot of experience there).
    Viral advertisement might lead to quick distribution, but there aren’t any metrics available as to their success are there?

  9. tjcnyc says:

    I’m an ex-ad agency creative guy and interactive agency owner. Today I’m on the client side.

    All the data on persuasion (and my own experience) supports Robert Scoble’s POV.

    But, we are drowning in media choices. So, less of us are likely to devote a half hour to engage with a single video. This supports Mark Cuban’s POV.

    What makes us believe that only one model can succeed? If pricing is based on results (which is certainly the direction we’re heading), then greater engagement can win by commanding a decent premium. Lesser engagement can win by offering advertisers lower prices and higher views — not all views need to pay out, just enough.

    From the user’s perspective, they get what they want — full video “meals” when they’re hungry, fun video “snacks” when they’re not.

    Why wouldn’t both approaches pay out?

  10. tara_h says:

    maybe what we need is a quick good clean secure method for people to pay small amounts to enjoy their content (long or short) ad-free if desired.

    in the meantime, as ad-targeting improves, quality sites will target their ads, sites with untargetted (annoying) ads will get less viewers?

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