Nothing Funny About A Good Online Video Business Model

August 20, 2008 at 6:51 am | Posted in Advertising, Business, Marketing, Online marketing, Research, User generated content | 1 Comment
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Courtesy of gapingvoid

Courtesy of gapingvoid

In their new September issue, Fast Company magazine features a fascinating story about the comedy web video business and how it’s almost impossible to make these websites profitable.

They lay out many of the current business models, but I think an addendum is useful. In this post, I will outline a mindset that hurts that industry, what the current business model is and why it doesn’t work, a suggestion to ensure profitability, and the business model that can make an online video site profitable.

First, The Mindset

We tend to think about web videos as a “thing.” It is a product. It is content.

Forget this mindset. If you’re a video producer, web video might be a tangible thing that comes from tangible people sitting around your tangible office. But it’s not.

For your audience, web video is an experience. There’s no actual product for the viewer – the video elevates the spirits or gives us hope or connects us to others. It has more in common with a trip to Disneyland than it does with buying razor blades.

So stop thinking of a video as a commodity and start thinking of it as an experience you provide for your viewer.

Second, The Model

As the Fast Company article points out, the prevailing business model is advertiser-based. This has been the case for most things in the U.S. for more than half a century.

However, the advertiser business model cannot support web video. Consider it: the marketplace is fragmented, niche sites have the most loyal visitors, online is still new to many advertisers, audience has a decreased appetite for ads, and the content (at least on the comedy sites) is oftentimes…edgy, to put it diplomatically.

Even off-shoots of the advertiser model don’t work, such as product placement and sponsored shows. The huge conglomerates that have the money to invest in these small comedy sites only know these sorts of models – give the product away in exchange for some advertiser time.

No matter how many times you throw money at the problem, this business model still doesn’t work.

But that doesn’t mean web videos will never be profitable. (Misters Murdoch and Branson, please have your assistants print out the following explanation.)

Continue Reading Nothing Funny About A Good Online Video Business Model…

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Half-life in Politics and Marketing

January 22, 2008 at 6:11 am | Posted in Advertising, Books, Communication, Decision making, General, Jaffe, Joseph - Join The Conversation, Marketing, Online marketing, Politics, Responsibility, Web 2.0 | 3 Comments
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In his new book “Join the Conversation,” Joseph Jaffe explains the faults of the one-to-many model of marketing. The idea goes like this: if you throw a big enough net, you’re sure to catch a fish or two. Junk mail is the perfect example. But you can narrow down this model by knowing a little about your audience. Jaffe says:

“One-to-many assumes that it is possible to divide and categorize human beings into generalist buckets, using artificial variables such as age, sex (yes, please), occupation or education, and, to a lesser extent, attitudes, interests, and opinions.” (Jaffe, pg. 13)

In a way, this goes against what I have learned in politics. Generalizations, polls, surveys, and focus groups all get you close to an idea of what people want. So much is determined by these methods. It makes sense to do a Get Out The Vote (GOTV) campaign in the district that voted most heavily for your candidate’s party in the last election. It makes sense to want to know that when you’re talking to a middle-aged, white, suburban mother that you should talk about your candidate’s national security stances while you might want to discuss the environment with a local college student (and about their voting eligibility).

The natural result of this obsession is Mark Penn. He is a chief strategist to Hillary Clinton and developed the idea of “soccer moms” for Bill’s run in 1996. His new book, “Microtrends: The Small Forces Behind Tomorrow’s Big Changes,” seems amazingly misguided in this new era. Or perhaps I can just feel this mode of thinking going extinct more and more every day. This NYT article does a good job of breaking down Penn’s thesis.

It is against this model that (I believe) Jaffe rebels. In the brave new world of personalization (real personalization), how useful are broad polls or trends? In fact, in an effort to know our audience, don’t generalization/trends/polls get us close, but in tandem ensure that we don’t reach this last intimacy with our audience?

In science, a half-life is the time it takes for half of the radioactive atoms of a given object to decay. Imagine this is a pie: first we cut it in half, then another half takes it down to a quarter, then another half takes it down to an eighth, continued ad infinitum. But by this method you are guaranteed never to get rid of all the radioactive atoms completely. Despite the small size, there is still half that decay and half that stays.

Likewise, polls and the like get us close to our audience. We do learn important facts that have helped win elections. But this method also guarantees that we will never truly know our audience. By the very manner of data extraction, we are generalizing all the time. A candidate could have a personal connection by talking to Jane Smith. But a candidate can never have a truly personal connection by talking to a “soccer mom,” or “NASCAR dad,” or any of these other ridiculous groupings of people that make up Penn’s microtrends.

It turns out that people are more complex than that. They can’t really be grouped this way because we don’t think in lock-step. Heck, most of the time we’re not even logical. Knowing people is difficult. Perhaps we can learn something at the intersection of science, politics, and marketing.

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