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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.