Advances in the filtering, monitoring and targeting of online video are beginning to make user-generated content a less fearful proposition for advertisers, or so says Lehman Brothers analyst Doug Anmuth in his Internet Inside Weekly report (PDF only, not online). Anmuth’s take: in addition to those protections, the audience-size thresholds imposed by sites like YouTube and Metacafe will help provide a more “well lit” and appealing environment for advertisers.
That was one of the ideas behind YouTube’s decision to open up its ad-revenue sharing “partner program” this past week. In addition to widening the revenue stream for parent Google, (NSDQ: GOOG) the program encourages its most popular users to create content that will appeal to an outside audience of viewers and marketers, as opposed to something intended for their own narrow amusement. It also helps solve the fundamental challenge of balancing users’ demand for independence and advertisers’ demand for a safe environment. Users can either choose to accept the kinds of limits that might make their work more appealing to advertisers, or they can ignore it and choose to continue to post ad-free work. Meanwhile, advertisers have a large, available pool of content providers who are tacitly willing to abide by certain restrictions. More after the jump…
Pointing to the similar incentives offered by smaller YouTube rivals Revver, which has had a 50/50 ad revenue split with users from its beginning, and Metacafe, which ramped up its ad-share program in October, Anmuth believes a trend will quickly form, as advertisers start to redirect the overwhelming amount of money spent on professional video sites toward user-gen. While he considers Screen Digest’s estimate that user-gen will garner $515 million in ad spending in the U.S this year a bit unrealistic at this point, the ability of amateur video specialists to reach those numbers isn’t too far off.
Figure 1: Unique Visitors to Select Online Video Web Sites, U.S. (in thousands):