Anja Merret
Anja Merret

Making money on the web

It seems that effective monetising of websites may still be a hit and miss affair. In an interesting article on Brand Republic the discussion is about a video site called Hulu.

According to projected ad revenue figures Hulu will be earning as much if not more advertising revenue in 2009 than YouTube will. What is particularly noteworthy is that Hulu had six million US visitors in September compared to YouTube’s 83-million. This is a huge difference in visitor numbers.

Hulu, founded in 2007 by News Corporation and NCB Universal streams free professional content such as TV shows as well as movies and clips. At this stage this service is only available in the USA.

YouTube on the other hand has predominantly user-generated content, although the company is endeavouring to address this by signing with Freemantle to create four dedicated video channels and with MGM to be able to offer a back catalogue of TV shows and selected movies.

With such a discrepancy of numbers of eyeballs between Hulu and YouTube, it seems strange that there should be such small differences in predicted ad revenue for 2009. The reason behind this seems to be that advertisers are reluctant to place their ads on a site that has such vast quantities of user-generated content.

In this instance the overwhelming amount of traffic seems to have little influence on ad revenue. In the more traditional media, such as newspapers, the number of audited readers determines the ad rate that may be charged. There are of course other factors that also influence rates, but circulation figures are the most important indicators.

It seems the internet plays to its own tune. Numbers are not it. Reputation is far more important. The danger with user-generated content is issues such as content and technical quality, copyright infringements or videos close to achieving a pornography label. These are just a few problem areas for user-generated content.

It will take some time before this medium will be understood fully by the marketing community. In the meantime it will certainly be a case of trial and error, with some spectacular successes and even more dramatic failures.

  • http://www.skillsportal.co.za Alan Hammond

    Very interesting post. I’ve seen reference in a couple of other reports to advertisers being cautious to advertise on sites with lots of UGC. Well that’s internationally – in SA advertisers are cautious about advertising online full stop!

    I would caution that we are discussing projections here, which are much easier to make than to reach.

    The other relevant point is that the differnce between Hulu and You Tube is similar in some ways to the difference between Amazon and eBay. Hulu is going to have to cover the cost of the content, as well as delivery. You Tube is only covering the cost of delivery.

    I wonder what this means for sites like Zoopy.com and Myvideo.co.za? They are already going to have to battle against the host of niche social networking sites that are on the way, and without a strong proposition for advertisers. Lucky for Zoopy that they’ve got Vodacom on board!

  • http://www.zoopy.com Jason

    Hi Alan

    Indeed we are all facing interesting times. Technology is advancing and advertising in general is becoming (and has to become) more interactive, more measurable and more one-on-one with the target consumer.

    In Zoopy’s case, we have a number of revenue drivers, ranging from display ads (banners) through to pre-roll video ads and custom-branded multimedia pages (e.g. http://www.zoopy.com/mitsubishi). We’re also continuing to grow Zoopy TV (http://www.zoopy.com/tv) that presents a whole new spectrum of sponsorship opportunities that will deliver meaningful messages to the viewers and valuable results to the sponsors.

    Regarding niche social networks, this is really a different kettle of fish to what we’re doing. Zoopy is not made or broken by the number of friends (or, in our case, ‘follows’ – you subscribe/follow someone who publishes content you enjoy). Zoopy is about content, which can only ever grow and never grow tired. The older content joins newer content to become a living archive of media that remains both current and historically interesting at the same time.

    Have a wonderful 2009!

  • http://www.easiest-way-to-make-money-online.com Jeff Paul Scam

    I helped my dad start his own blog and internet market his blog, since he’s retired and don’t have many things for his past time. He sometimes enjoys the work but most of time he feels like a burden since he does not know much about IT.