Last week, Time Inc. announced its Sports Illustrated brand will launch an online sports news and highlights network in partnership with three of the four major professional sports leagues, NASCAR, and several college conferences.
From a business perspective, the story here is that Sports Illustrated is now the latest publisher investing heavily to increase the number of videos it produces. In doing so, it joins both old media stalwarts like the New York Times, which in November created a thrice-daily, one-minute news update, and new media stars like Buzzfeed, which in 2013 invested in a new video studio and grew the size of its video team to more than 30 employees.
While Americans are indeed watching a record-breaking amount of online video these days, publishers’ decision to create more video content has as much to do with appealing to potential advertisers as it does appealing to readers.
That’s because video ads are some of the most valuable, and expensive, advertising inventory the web has to offer. Ever since the web began disrupting traditional publishers, those publishers have struggled to create value for their advertising clients online.
Because many people have ad blocker software or have simply learned to ignore the fixed-place banner ads they come across on the web, brands are often hesitant to purchase banners and unwilling to pay much money for them when they do. Banner ads on the web can be sold for as little as $US1 for 1,000 views and often do not top $US10.
Video is a different story. Because, in theory, viewers have no choice but to sit through a pre-roll video ad after hitting the play button on a video they want to see, brands are confident they are paying for at least a chance at a viewer’s undivided attention.
As a result, the prices for these ads are usually at least twice as high as a banner ad on the same website. According to a figure from the video ad-buying software company TubeMogul cited in a recent New York Times story, big publishers like CNN and CBS charge more than $US20 for every 1,000 video ads they show.
Right now, most of these premium publishers are selling out their video advertising slots without much trouble, and the trend will likely continue in the near future. According to a study put out in October by the AOL-owned video ad tech company Adap.tv, 86% of the 171 brands surveyed expected to increase their spending on video ads in 2014.
As long this demand continues and prices for video ads remain high, you can expect to see more publishers join Sports Illustrated and the New York Times in ratcheting up the number of videos they produce.
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