User generated content draws few ad dollars

July 18, 2008 by Dave Haynes

Every few months people get all whipped up about some buzz phrase or technology that will be a big part of the future of this industry.

For a while last year, people were blabbering away about user generated content, and how video material supplied by the great unwashed would be a cool thing to build in to a network’s content offer.

Never mind the technical challenges of that, the bigger problem is most user generated content is horrible, and sifting though the piles to find something engaging is a massive chore.

This seems to be backed up by the online video streaming industry, which is reporting that while user generated vids account for 42 per cent of all video streams, it generates four per cent of the ad revenue.

From MarketWatch:

User-Generated Video (UGV) will continue to account for close to half of total online video streams between 2008 and 2013, but disappointingly will produce no more than 4% of ad-related online video revenue at any time during this period. According TDG’s latest analysis, Online TV and the Future of Digital Video Advertising, the prospects for online video advertising have little to do with UGV, except as an indirect way of drawing more viewers to professional online video sites capable of generating sustainable ad-related revenue.

According to Mugs Buckley, a veteran of TV and video advertising and author of TDG’s new report, UGV currently accounts for 42% of online video streams, yet generates less than 4% of video ad-related revenue. Conversely, professional online video (including both short-clip and long-form content) accounts for 58% of streams and 96% of ad-related revenue, a reality unlikely to change over the next five years.

Yes … Mugs Buckley.

Anyway … without a doubt, there’s a place for this stuff on networks – like stupid pet trick videos submitted into a network targeting pet supply stores. But it’s just a little piece of the puzzle and few advertisers want to be associated with unpolished material unless it is really, really special.