Online video may look like TV, but so far the tiny computer screen hasn't been able to deliver the same reach as its larger-screened rival. A new startup aims to change that.
When a video interview of Tom Cruise hit the web a few weeks back, Will Ferrell's FunnyOrDie was quick to offer its spoof featuring actor Jerry O'Connell impersonating the star's frenetic defense of Scientology. The Gods of comedy, an easy-to-use distribution channel and the public's fascination with Cruise created a perfect storm that breathed new life into FunnyOrDie and delivered more than 1 million views (and counting) to the sponsor -- Cheetos. That was the good news.
However, for those keeping score at home, Cheetos may have lost more than it gained. The video did exactly what its producers hoped it would do, namely take on a viral life of its own. But Cheetos, which ran a banner ad against the video on FunnyOrDie, doesn't get anything from viewers who watch the video elsewhere.
And this story of the latest FunnyOrDie video isn't an isolated incident. O'Connell's spoof of Cruise represents the big problem in online video today, namely that content producers and advertisers likely miss more of the total audience than they manage to capture.
"When a video like 'The Daily Show' appears on YouTube, we ask who is allowed to sell the ads, who gets paid and how much?," FreeWheel co-founder Jon Heller asks rhetorically, believing that his startup may have found an answer to what he calls "the billion-dollar question."
While Heller's use of "The Daily Show" may be a loaded example given Viacom boss Sumner Redstone's legal battle with Google, the problem is quite common, and it's one Heller believes is impeding the growth of syndicated, professional quality video online.
A recent article in The Los Angeles Times bears this out. "Gossip Girl," a show aimed at teen girls, consistently ranks high on iTunes in terms of downloads, but the TV broadcast of the show has never moved beyond 2.6 million viewers, even after an aggressive marketing push.
While high downloads and low ratings are a headache for network executives trying to cope with the digital age, media buyers have been sent into overdrive by the problem as they look for a way to reach everyone who's watching "The Daily Show," "Gossip Girl" or the latest FunnyOrDie spoof.
For media buyers, the choice then becomes a matter of selecting the lesser of two evils. If the buyer opts to use TV as a method for reaching a show's audience, the numbers will likely disappoint. But if the buyer chooses digital, the problem becomes one of assembling the audience -- a task previously left in the hands of the networks and their affiliates.
The result is that today's media landscape is beginning to look like Humpty Dumpty after his fall.
All the king's horses and all the king's men…
To put Humpty Dumpty back together, some content owners, like the BBC, have turned to syndication deals that allow them to reap revenue from videos no matter where they appear on the web. Most recently, the British TV network announced plans to syndicate its content through MySpaceTV in a move it hopes will spread its content beyond the confines of its branded websites. But so far those deals have been the exception to the rule.
"What publishers and content producers are doing today is not syndicating, but effectively ceding sales to distributors, or keeping the money themselves," Heller explains. "That's horribly suboptimal."
To optimize the advertising video puzzle, Heller has teamed with fellow DoubleClick veterans Doug Knopper and Diane Yu to launch FreeWheel, a monetization rights management solution.
According to Knopper, FreeWheel helps publishers, producers and marketers make the syndication model viable by "solving the advertising log-jam."
What that means precisely is that FreeWheel makes real-time, relationship-based decisions about who serves what ad and for how much.
That's an important breakthrough, according to David Clark at Joost, which now uses FreeWheel technology.
"Many professional content providers have been hesitant to embrace online distribution because it has been unclear exactly how they will make money," Clark says. "Now it's clear, and we'll see the move online by content owners accelerate."
The big picture
While Clark thinks that syndication may be the silver bullet in online video's battle to overtake TV, at least one hurdle still remains: ad units.
According to a recent Burst Media survey, internet users love video on the web, but they haven't found an ad unit that makes sense. In fact, many of those surveyed reported being annoyed by ads that interrupted their viewing experience.
That's a big challenge facing everyone in online video, Heller says. Although FreeWheel has the ability to serve up a myriad of ad formats, the industry will need to close in on a video ad unit that works if FreeWheel, Joost, YouTube or any other web video company is going to amount to anything. But to do that, the industry will have to answer what might be the trillion-dollar question.
Michael Estrin is associate editor at iMediaConnection. Read full bio.