UBS: 10 Conditions Of Success For Any Online Video Venture

Matt Coppet and the UBS Global Media Investment Research team puts out a great newsletter each day about the online media and telcom industry, typicaly focusing each newsletter on a particular topic. This week, one of the topics was focused on the numerous online video ventures recently announced by many of the major broadcasters.

From their newsletter, here are their "10 conditions of success for any online video ventures": Traffic optimization, advertising integration, brand focused, syndicated model, social media friendly, independent decision making, bandwidth costs control, leveraging data mining, bit sized content
available and predictive marketing

  • (1) High web traffic from start is necessary to sustain advertisers’ interest and to soften the impact of higher ad inventories on CPMs. Current CPMs up to $50 would be tough to retain in a basic streaming environment (no targeted ad).
  • (2) Integrated ad servicing process is key (no ability for each partner to sell its own ad inventory, which would defeat the purpose). It also eliminates channel conflicts.
  • (3) Brands/advertisers friendly (brands should be able to go behind pre roll/post-roll ads. We believe opening the full interface to branding/ sponsorship – including the player skin – is key. Ability for users to bookmark content and distribute segment is important.
  • (4) Syndication model can work with compelling content. It is not a surprise to see NBC Universal in the venture. It recently pre-launches the National Broadband Co. (nbbc), a content syndication marketplace. We do not know yet if nbbc would be integrated into the venture or become an infrastructure partner.
  • (5) Minimal social-media (web 2.0) function (such as users’ commentaries/ ratings/chat). Over promising in term of user customization could conflict with future branding/sponsorship. For instance, mySpace users would be able to embed those videos from the NBCU-NWS venture on their webpage. Any venture would have to make sure of the integrity of the player branding (against program scripts that could remove them).
  • (6) Independence is important Operating power should not be shared among partners, which could slow down the decision making process. It also eliminates conflict of interest.
  • (7) Contextual advertising (or predictive marketing) should enable advertisers to focus on branding as well (and not only on shorter term promotion). As relevance improves, brands would likely spend more driving monetization up.
  • (8) Managing bandwidth costs is central to any ventures success.
  • (9) Moving from simple data gathering to leveraging data. Understanding the customer (analyzing databases) offers a potential viewer "lifespan value".  Package goods companies for instance could be inclined to spend more for addressable advertising.
  • (10) Offering content in the format customers want (such the 5 minute signature moment in a sitcom or a specific candidate performance on American Idol). Smaller length would respond their younger demo aspiration and could increase the ratio ad over content.