The challenges of making online video pay

Credit: Image by Images_of_Money on Flickr. Some rights reserved

According to recent research conducted by Cisco, by 2020 over 75 per cent of the world's mobile data traffic will be video.

So as consumers increasingly seek out news on their smartphones and the demand for mobile video continues to grow, how are publishers able to monetise this market opportunity?

Although it is unlikely the ever-changing media industry is to find a definitive answer just yet, news organisations are continuing to experiment with the use of mobile video in a way which appeals to their audiences while also being profitable.

Speaking at the FT Digital Media conference yesterday (12 April), Lindsay Nelson, global head of brand strategy at Vox Media, explained how the shift in audience consumption habits now offers an opportunity for publishers to make money from mobile video.

"The cost per thousand (CPMs) and the amount of money people will pay you to run their video advertising is the highest above all digital advertising," she said.

"You saw a tremendous demand of premium CPMs, so then you have all these publishers rush to create more cost efficient content – now you're starting to see a reconciliation of that."

Nelson explained that there is a "big balancing point happening around cost and layout", where publishers have to start revenue sharing on social media platforms such as Facebook and YouTube, that make it harder to get audiences to consume content on their own channels.

But she pointed out that, fortunately for publishers, they are now monetising mobile video at the same rate as desktop.

"Three years ago, if you wanted to buy digital media you had a rate for desktop and a rate for mobile and that was because the mobile advertising solutions were terrible – nobody wanted to pay the same amount for a big beautiful homepage takeover as this tiny little thing on your phone," Nelson said.

"Now the mobile viewing experiences are arguably more immersive than something on your desktop, so that convergence has already happened – no longer are people buying things on mobile in a different way that they are buying on desktop."

The better understanding you have in terms of what to serve to whom, you're going to get smarter about the way you distributeLindsay Nelson, global head of brand strategy, Vox Media

But as the amount of video online continues to increase, how do publishers compete and keep their audiences loyal?

"We want to keep as much of our audience as possible, and that is getting increasingly more difficult to do," said Nelson.

"I think a lot of it is experimentation around formats, so figuring out what are the storytelling formats that work, and doing a lot of data testing to figure out trends where you can start understanding where different audiences are attracted to different types of video."

Indeed, in the bulk of content online, what makes a publisher successful is its ability to take into account the context in which that video will appear.

"We are spending a lot of time trying to understand there is a certain type of person that watches video and there are lots of people that never watch video. The better understanding you have in terms of what to serve to whom, you're going to get smarter about the way you distribute," said Nelson.

Nelson noted that publishers used to focus on pulling audience members in to their sites from social media, but are now using an inverse strategy to push content out, aiming to decipher what people want from video from different platforms, in the way a story is both physically delivered and the way it is told.

"That is a big shift and I think a lot of publishers have figured that out, but some have not and see [social media platforms] as purely distributing opportunities," she said.

But as publishers are still unaware of what video content works best on social media with different platforms having different algorithms, news outlets are trying to work out the best way to deliver their content in order to attract advertising revenue.

This is made more difficult when the platforms themselves are relatively new in this space and are not able to tell advertisers what works best.

"If anybody tells you what works on Snapchat, they are full of shit. To some degree, not even Snapchat knows, but that is what makes it a really exciting platform because it is being created in real time," said Nelson.

"I think they are figuring out on the advertising side what are the tail stakes for advertisers to spend their money on Snapchat – factors like understanding of the audience and impact for example, so they have to figure it out.

"The response for advertisers is, 'tell me who I am talking to, what is the return on investment (ROI) on my brand? How do I tell a brand story on Snapchat in a very different storytelling platform?', so it's very new for everyone."

But Nelson was quick to explain that news organisations must venture into the unknown in order to be there when there is revenue to be made from the platform.

"That's the challenge of Snapchat – no one is sure of the monetisation yet, but if you are not there and somebody else is, then you are not going to own whatever that conversation is."

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