Wondering what is the best way to monetize web videos? The answer to that question is ever adapting. Let’s look at the pros and cons of the most popular methods today: video advertising, sponsorship and Pay Per View video.
When people think about monetizing video on the web, this is the first method that comes to mind. For many broadcasters, advertising is the preferred method of earning revenue. You are only asking for more time from your viewers, and getting monetary compensation in return.
Video advertising is also on the rise. Forbes reports that online video advertising rose 17% in 2013 to a new record of $42.8 billion. A lot of this is attributed to the rise of mobile viewing. In fact, there was a 110% jump in online video viewing on mobile devices. This is the third straight year of triple digit growth in this sector.
Unfortunately, video advertising requires massive audiences to be successful. This is an appealing method for studios and those that bring in large audiences on YouTube. It less appealing for those starting out or with modest audience sizes. In fact, it’s not just a question of being successful, but most ad networks will not bother with smaller broadcasters. At this volume, “smaller” is considered those who are well below a million in projected viewership. Small and medium size broadcasters will struggle with this model, sadly.
- Best suited for major studios and large broadcasters
- Low effort required from viewer
- Requires large audiences to be successful
- Have to prove large viewership to ad networks
Sponsored streaming makes a lot of sense for many. From schools to leagues, companies can earn goodwill by supporting local venues and also generate interest in their services. A sponsorship generally carries the least risk involved as well. The only downside is that it can tarnish a relationship if viewership doesn’t meet predefined levels.
Generally a lot of work is involved in setting up a sponsorship. However, this can be both a short term or long term solution for financing and generating revenue from streaming.
- Low effort required from viewers
- Less risk
- Difficult to setup
- Need to maintain viewership for long term sponsor relations
Pay Per View
Monetizing with a paywall is the new kid on the block. Although the method has been around for about half a decade, it’s less familiar to end users compaed to the other two. There is a strong case, though, for when to use Pay Per View monetization. It best works for those with a dedicated audience and those who might generate more modest crowds.
For small and medium size broadcasters, Pay Per View is a very real solution. From the time DaCast launched until early in 2012, the service used to employ ads as a monetization option. Over that same period, Pay Per View and subscriptions combined earned over 245 times the amount of revenue that advertisements did.
While it was not too surprising to see paywall revenue take the lion’s share, it certainly exceeded expectations. Part of this is simply a matter of scale. A video sold for $4.99 has greater potential to generate more income than a video with $5 CPM. To make $25, the $4.99 video needs around 5 buyers, while the add approach would need 5,000 viewers for the same result.
Paywalls generate far more income with a much smaller audience. This makes it perfect for niche broadcasting. Paywalls also appeal to the live “Pay Per View culture” that has been ingrained in viewer’s psyche from sporting events on TV.
The downside to paywalls is that you are asking the ultimate commitment from your viewer: to spend money to watch your content. You will also be expected to support them, for example if your power goes out and a live stream goes down. DaCast makes this as easy as possible to add a paywall that can generate extra revenue. The service provides credit card and PayPal transactions that can be done inside the player. It’s also easy to setup, with the ability to add it into the player with a few clicks of a button and no messy additional embeds. Regardless, it takes more commitment from the viewer than advertising. It works best for premium or desired streaming, such as live broadcasts or delivering a unique service or seminar.
- Perfect for niche and smaller audiences
- Easier to make more money with less limits on your maximum revenue
- Asking your viewers for money
- Need to support viewers and have plans if broadcast goes down
Evaluate your streaming and choose the method that is most appropriate. If you feel your streaming is a natural fit for sponsorship, and can maintain value to the sponsor, that might be the best approach. However, be prepared if the sponsor should pull their support and have a backup plan.
If you have a more modest streaming audience and don’t feel that sponsorship would be a good fit, look into paywall solutions. This is the easiest method to generate a return on investment without the need for gigantic viewership. Factor in viewer relations, though, into your monetization plan. The most successful Pay Per View broadcasters are ones that can maintain a loyal following.
By Anthony Romero.