Online video and television are two different beasts.  Yet because they are very similar in the delivery of moving pictures, people often confuse the two.  Let's look at the economics behind this and we'll see why there's a huge difference in how we monetize video versus television.

The current TV model is all about impressions.  The typical national TV station sells ads at about $25 CPM (cost per thousand impressions).  The lowest rated NATIONAL stations receive about 1mm viewers - yielding about $25K per show.  This show then gets canceled.  Cable, on the other hand, is able to survive with smaller viewership numbers because their CPMs are higher since (we hope) their audience is more targeted and more valuable.  High disposible income channels like CNBC, and the Golf Channel can sometimes command CPMs as high as $100.  This explains why CNBC who has a daily average viewership of 200,000 viewers can be one of the most profitable TV stations out there.  Thus, TV is a game of numbers.  Similar to some social networkers, TV is all about collecting "friends" or in their case viewers.  The more eyeballs the better because then they can sell more CPMs and therefore make more money. 

The web is more about targeting.  Since there is near infinite channels on the web (you might have 1000's of cable channels, but you can't even count how many options you have on the web), a hit on the web could have 100,000 viewers in a month!  This is small fry when it comes to mass media.  Even at $25 CPM, a star on the web makes $2500, barely enough to cover production.

And this is where the disconnect occurs.  We are using TV mediums to monetize web properties.  In general, the web isn't about aggregate eyeballs (although some would argue this), but it's about getting down to the tiniest niche.  Meetup.com does this well, with "Meetups" for everything from Chutes and Ladders players to Techies in New York.  Again, like CNBC, this demographic becomes more valuable because you get a better idea of who these people are that you are advertising to, and what they may potentially buy, use, etc.

We all get this, right?  The long tail of web advertising.  Well then why are we not utilziing it properly?  Why are we still stuck in using television style of monetization to monetize online video?  We need to provide more value to the advertiser.  We need to start carving out who our viewers are and what their likely habits could be.  TV is a mass market medium but web video is niche market medium.  So how do you raise your CPM then?

1) Fill out a fuller profile of your viewers
2) Bring the viewer one step closer to purchase (or conversion)
3) Enable your viewers to talk back to the content (and thus letting them fill out their own profile)

In the next posts I'll go into each of these.  Till then, we are hard at work making the KlickableTV experience better than ever.  Feel free to make any suggstions or comments!  Look forward to a site relaunch and a new awesome easy to use KlickableTV authoring tool!

Photo courtesy of shawnblog