Hot Chip Startup Novafora Buys Transmeta – Video Chips Are Hot

Novafora Inc., a startup developer of video processors, has entered into a definitive agreement to acquire Transmeta Corp. for $255.6 million in cash. Novafora is developing video technology on a chip. Word on the street is that the technology is very ‘hot’. The video market is in the need for faster processing at the chip level. Right now video adoption is huge and the capabilities for moving video online is stunted by the capabilities in processing power.

Innovation coming from startups again and getting assets from Transmeta will help Novafora.

The acquisition agreement provides, among other things, that Transmeta may not enter into any future licensing transaction prior to closing of the merger without Novafora’s consent. The acquisition is expected to close in the first quarter of 2009. After the closing of the merger, Transmeta’s common stock will cease to trade.

Formed in 2004, Novafora is a video processor company enabling OEMs to deliver on the promise of the digital video revolution. Zaki Rakib is CEO and co-founder of the startup. Before Novafora, Zaki co-founded Terayon Communication Systems in 1993.

Shlomo Rakib is chairman, CTO and co-founder of the firm. He also co-founded Terayon and served as its chairman and CTO. At Terayon, he is said to have invented the S-CDMA technology that fueled Terayon’s initial success and which was incorporated into the widely-adopted DOCSIS 2.0 cable data standard.

Liveblogging Hulu CEO Jason Kilar At NeeTeeVee Live – He’s Obsessed

Jason Kilar is giving the keynote at the NeeTeeVee Live conference. A big wave: He talks about the 12.6 billion streams online today. Users are responding. Hulu was founded to take a look at this new environment. Hulu is looking to establish premium content like what Starbucks did for coffee. Making it easy to consume and put it everywhere.

Media is an impulse business and the first law is to make it easy to consume. That is their vision. Their formal mission is to help find and enjoy the worlds premium content when, where, and how they want.

Obsessing: Jason was inspired by Disney World. Talks about attention to detail similar to Disney on how they keep their theme park clean. Specifically the detail around the user experience screen real estate..etc.

He is talking about the backend and how they change the user experience based upon the search request on the site. Again back to his obsessive user experience.

I’m impressed by their focus on user experience.

Results:
12 million monthly users; 145 million monthly streams; embedded 1.5million times on over 60k sites. Attracted over 115 top content owners; content partners seeing dramatic lift in terms of their overall onine business. Advertiser demand exceeded expectations. I’ve been tracking this for some time and this is the future business model see my link to past post.

Questions from audience:
Advertisers pulling back: seeing uptake on video and not concerned about advertising right now – emphasis is on the brand.

International plans and key territories? Won’t go into detail on their roadmap. He is indicating that they are very focused on a global vision.

Cnet is saying they are having problems recruiting advertising and ability to serve up ads. Won’t share any financial details. Jason is talking about monetizaiton around premium videos. Ad supported video is $80b. Ad revenue is critical for Hulu. Jason isn’t really giving an answer on this.

Product placement: hot spotting is good on the Internet and he sees this as being big and is possible on the Internet today. It’s a function of getting the user base large enough. Emphasis on critical mass.

What’s holding Hulu back from moving fast? They are a startup and the reality is that they have limited resources.

Update: Venturebeat has a story among others on Techmeme.

Online Video Business Model – Here It Is Folks – The Evidence – SNL and Olympics

This Adage story is very relevant. Author of the story Michael Learmonth nails it totally.  It is the business model of online video.  All the folks looking to figure out how to monetize online video today – stop and read the Adage article.  The online video business model is in the article.  I’m pasting the entire article below because it strike at the hear of the real value proposition – the content franchise and the user behavior of existing and new audiences.

This is evidence that the cross platform “halo” effect of great content drives mainstream programming and its franchises.  This is at the core of the online video value proposition and an opportunity for video platform startups like Volomedia (I’d say PodTech but it’s dead).   I just talked to the founder (Murgesh Navar) and the CEO (Brian Steel also the Chairman of Pandora) of Volomedia about this in a podcast (soon to be posted – stay tuned).  Volomedia gets this and is building the platform for portable media and cross audience measurement.

Portable media or downloadable media reaches the same audience of those who watch TV PLUS it reaches audiences that don’t watch TV.  Online video media creates synergy and “Pull” with it’s parent content franchise.  It creates aided awareness to the users already consuming both platforms (TV and online) AND pulls in the new audience as evidence by the success of the SNL numbers.

Big trend:  Portable or online video crosses over to TV.  Widgets, portable formats drive offline perceptions.  This is huge.  Saturday Night Live and the recent success of NBC’s Olympics strategy prove this.

I think about all the startups and big companies innovating in online when I read this story from AdAge.  This is the strategy.  It’s a big value proposition – use online video to complement the broadcast franchises.  We saw it with the Olympics – NBC booked over $1b on TV ads with their live coverage online.  Although their online used low cpms and had niche programming – it creates a ‘rising tide of users’ that translates directly to the core asset – TV broadcast.   We are also seeing evidence that this is working in ITunes podcasts as well.

HELLO ONLINE VIDEO BUSINESS MODEL.

Here is the article

NEW YORK (AdAge.com) — Vice presidential nominee Sarah Palin’s appearance was very good for “Saturday Night Live,” bringing the show its best ratings in 14 years.

The clip of Amy Poehler’s Palin rap sat at No. 2 on Hulu.com.

But the number of people who have watched the clips on the web is closing fast, and will soon surpass the 15 million that watched on TV, if it hasn’t already.

The traction is real
Two clips of the Alaska governor on “SNL,” her fake press conference and appearance on “Weekend Update,” have racked up 6.1 million views on NBC.com. Derivative versions such as those used in news coverage, as well as pirated versions of the clips, have been viewed another 2.85 million times on sites like YouTube, MySpace and Yahoo, according to web video measurement firm Visible Measures.

Combined, the videos have been viewed 8.85 million times since Sunday, an impressive number in four days. But that doesn’t include what may be the biggest source of online viewing: NBCU and News Corp.’s joint venture Hulu.com.

Neither Hulu nor NBC will provide Hulu’s streaming numbers, but they’re likely to be high. Hulu streamed four times as many videos (142 million) as NBC.com (36 million) during September, according to Nielsen’s Video Census. While it’s possible a high percentage of viewers looking for “SNL” clips would go first to NBC.com, it’s also likely that Hulu counts for as many, if not more, views as NBC. The opening skit with Tina Fey holding a press conference as Sarah Palin, while the real VP nominee looked on, was the No. 3 most watched Hulu clip this week, while the clip of Amy Poehler’s Palin rap sat at No. 2.

Hulu numbers are regularly included in NBC’s Total Audience Measurement Index, which tallies viewership for web and mobile platforms as well as TV on a weekly basis for prime-time shows, but not late night.

Added revenue
Online video streams and Nielsen ratings aren’t comparable — the Nielsen viewers are unique; streams aren’t. But the point is that the online clip will ultimately expose “SNL” to a lot more viewers than TV alone. And with pre-roll advertising running on NBC.com and Hulu.com, it is also adding revenue. On NBC.com, a pre-roll for HSBC was shown before the “SNL” skit, while on Hulu ads for products such as Oil of Olay, Right Guard and Travelocity have been shown.

NBC says “SNL” ‘s election-related clips have been viewed 45 million times on NBC.com since the season premiere Sept. 13.

The Silicon Valley and Hollywood Dance – It’s a Hit Driven Market

There are striking similarities between Hollywood and Silicon Valley.  The inside joke that I’ve been sharing lately in comparing the two markets –  in Hollywood when actors are out of work (no script) they become bartenders or go to events and pose and in Silicon Valley when entrepreneurs are out of work (no startup) they are consultants or go to events and pose. Each actor or entrepreneur are claiming working on the next big thing.

Both markets thrive because of optimism.  That is why the best survive by seeing opportunities when other people talk about doom and gloom.  I see Hollywood and Siicon Valley striking a balance very soon.  They both need each other.  The both are realizing that they don’t have the skills that the other has.  This NY Times story strikes true.

If there is any proof point look no furthen than Steve Jobs success at Apple.  He and his team have single handedly changed the media game by using the ITunes platform (aka the ITunes store).

Of the NY Times story here is my favorite piece…

Hollywood and Silicon Valley are engaged in an awkward dance, Mr. Miller said.  “Having been inside studios, I know they don’t have the DNA to take early-stage risks,” he said. They get paid to make surefire hits like the Superman movie. “To start something from scratch, to take high levels of risk — generally speaking, that was not how the studios were built.” The two worlds speak different languages and “there is star envy on both sides,” he said.

Yet they have similarities, he said. Both are hit-driven businesses run by small, insular groups of people. More importantly, they need one another. Entertainment companies will founder if they don’t move from old media like television and radio to digital media. Meanwhile, tech companies will fail if they do not understand the content — movies, shows, music — that people will use their technologies to consume.

The economic downturn has arrived at a critical time for the entertainment industry’s transition to digital media. Many of these big media companies will be forced to cut back on acquisitions of digital media start-ups, Mr. Miller predicted.

Eventually, he said, there will be a shake-out, with two or three companies creating professional content for the Web, just as there have been dominant producers of network programming for television.

For now, “everyone agrees these worlds are crashing into one another,” he said.

Online Video The Big Secret – There are Problems – Can’t Handle Millions of Concurrent Users

It’s common knowledge that I’m very bullish on online video, but the numbers are so small.  Even reports of great success come on with Hulu there are some telling limitations. I like Hulu thay have great content (TV and other premium content), but there is very gaping hole in the market – a  ‘public secret’ in the online video world – The metric to watch is Number of Concurrent Users.  What is Hulu’s concurrent user number per day?

With the Olympics looming large it’s clear that live and downloadable programming is relevant but it’s still not good on the net.  Downloadable media is great, but to reach massive critial adoption online video needs to support millions and millions of concurrent users  (including both  live or downloadable video).

Downloadable video is successful because it doesn’t have the massive amount of concurrent users.  I’d be interested in knowing how many concurrent users Hulu has in their 100 million streams a month.  Is it long tail content or is it really popular.

Popular content (both Live and Downloadable) require massive concurrency.

This is the public secret most media companies can’t even handle 100k concurrent users.  This is a big bottleneck in the advancement of online video.

Hey Online Video is Growing Big – Not a Surprise Online Advertising Video is a Real Market

Having founded and ran a media platform (video) startup since 2005 I’m not surprised by the recent reports that online video advertising is growing big time. This shows to some VCs who have been not so bullish on video and advertising that the online video platform business is real and relevant (note my VCs wanted to turn my vision of building a media advertising platform into a production company and PR agency).

The problem is that most VCs and new players to the online video market are having a hard time figuring out the business model. Not sure why – it’s pretty obvious it’s advertising. The problem or better yet said “opportunity” is that the ad unit needed to leverage these new networks, new content types, and syndication/aggregation technology just isn’t here yet. It will be soon. I know a few great companies working on that vision. As soon as the ad unit and enabling infrastructure supports performanced based contextual videos the money will flow.

Liz Gannes over at NewTeeVee has a good post on the recent Lehman numbers that online video is growing (she has other numbers as well from other sources).

Here is the text from Liz’s post:

The investment bank Lehman Brothers, which basically discounted the potential of online video advertising in a recent report on digital entertainment, now puts a number on that market: $1.1 billion in U.S. video ads this year, rising to $2.4 billion by 2010.

Lehman had previously forecast that video-on-demand and iTunes revenues for studios would climb to $2.5 billion in 2015 from $319 million in 2007, so paid content and ad revenues are at least in the same ballpark. Of course, they’re nothing like traditional television numbers.

The report isn’t available online.

The Lehman forecast for online video is pretty middle of the road, even a bit pessimistic compared to those of other firms (though most predictions tend to extend a couple years further out). Parks Associates sees $6.6 billion in 2012 in U.S. online video ads by 2012; Forrester is looking for $7.1 billion by 2012; and eMarketer says $4.3 billion by 2011. And In-Stat said today that it expects $4.5 billion in worldwide revenue from all online video business models by 2012.

In other revenue projection news (which there seems to be a ton of today; see Chris’ report on premium video revenue), eMarketer points to an iSuppli report that projects $3.8 billion in worldwide mobile advertising revenue by 2011, up from $427 million in 2008.

All of these discussions remind me of the early days of the web when then online advertising spend was always compared with traditional advertising spend. I think that it’s safe to say that the ad dollars are shifting online fast. At what pace will determine the magnitude of change of these forecasted numbers.

I’ve been recently bullish on live video as well as downloadable media. The combination of Live and Downloadable is very compelling.

Again: Video Ad Model – It’s MicroContent NOT Pre-rolls

Whew it’s about time a report like this came out.   I said it in a post right after ad:tech in New York that it’s Microcontent for ads online.  Now it’s affirmed by the data.  Silicon Alley bluntly states the obvious.  Everyone hates pre-rolls – lets get used to it and move on. 

The online advertising model is the content itself.  When I founded PodTech two years ago it was clear this was the trend.  Now Microcontent is going mainstream.  Why?   In social networks that have microtargeting microcontent works.  Contextual content meets a targeted user. 

Opportunity for brands:  Activate your brands online now for the next cycle of innovation.  In web 1.0, companies activated their brands with web sites.  In Web 2.0 and beyond, brands need to be activated online with content on a platform that enables targeted distribution in micronetworks.

Activating brands online isn’t about putting up a fan page on facebook.  Instead, it’s about providing ‘great’ MicroContent.  – with great tracking. 

All the web 2.0 social media talk today is about brand engagement, but you can’t have engagement without brand activation.   For all the brand marketers out there ask yourself the following question:  are my brands activated online?  and if so how?

Finding The Next Google – We’re Getting Close

Everyone has been looking for the next Google — well at least here in Silicon Valley.  When I saw this article the first word that came to my mind was “validation”.  I’ve often been called crazy for saying that the next Google will come from media not technology.  It’s becoming clearer that this is happening.  Advertising dollars move based upon who can understand user behavior.  Google did it with web pages in Web 1.0, but now in Web 2.0 it might be a media company like NBC Universal. 

Media Content networks (TV networks, corporate networks, studio networks, event networks, etc) will be a viable business model.  It is known that venture capitalists here in Silicon Valley reject the notion that content is a viable business model.  However, this NY Times article by Matt Richtel validates the idea of Microcontent as a business model.  My original intention with PodTech was to create a content platform business.  I did not have the opportunity to finish what I started (My VCs removed me from employment at PodTech last summer – PodTech is now focused on breakeven cash flow positive and is very close to achieving that goal).   

At Adtech in NY it was clear to NBC’s Beth Comstock that the big networks, studios, and advertisers were formulating their plans around emerging Internet content business models.  NBC Universal is clearly focusing on this now.   Hey Beth, NBC could be the Google of the media business if you move fast.

It is my opinion that Microcontent is the best online advertising business model – why?  It’s the contextual keyword for the media business.  What Adwords and Adsense is for Google – Microcontent is to media networks.  Microcontent targets the audience, and provides the best opportunity to deliver the smartest marketing information from both behavioral and contextual advertising.  If you add in the ‘flat’ global Internet then you have the ability to sell global, regional and local ads.  This is huge.  It is the future of online advertising, because now video ads once only made for broadcast TV can viably move to the web at scale. 

How fast will this happen?  It is hard to tell, but I’m watching HD as the key variable for this timetable.  Specifically, the timetable is highly correlatated to the speed at which Intel, AMD, Adobe, and Microsoft move to achieve the computing and web display technologies such as flash players, widgets, xbox,…etc.  (The other variable that I’m watching is too crazy to talk about in public at this time but it has to do with video).

This is opportunistic news for web 2.0 content folks and emerging indie networks.  Tip of the hat to Matt Richel of the NY Times for getting IMHO one of the biggest “little” stories coming of CES.  

Overiew of Current Web Video Ads Solutions – Inside the Numbers

What is the current web video marketplace today for advertisers?  What are the options? How much?  This compilation by WebVideoReport documents the going asking rates for different kinds of ads connected to Web video.

Web video is growing rapidly and the solutions are changing.  I’ve been very public about new solutions around social media and I think that they are coming fast.   That being said the one thing that is important is standards.  In today’s marketplace the standards are basic but functional – pre-roll, companion banners, and network buys.  Why?  Comprehensive targeting and behavioral solutions don’t exist yet.  Add another new trend like collaborative ad – where consumer contribute to the ads- and you have really crazy change.  Well for now it’s preroll and companion banners. 

Below is a sample of some of the populare solutions.  There are many left out like PodTech which does custom ad solutions for viral social media, Facebook the leading social networking site, LinkedIn – the leading B2B contact mgt and business social portal, and handful of ad networks.   Outside of PodTech, Facebook, and LinkedIn the rest of the market is similar to what is outlined below.  PodTech, Facebook, and LinkedIn offer an entirely different value proposition than CPM based solutions.  For more on why I think PodTech, Facebook, and LinkedIn are valuable  see my post on Microcontent for Microtargeted environments.

PUBLISHERS
Wall Street Journal
The Wall Street Journal, the flagship newspaper for News Corp.’s Dow Jones company, is building out its video advertising content as an adjunct to the subscription revenue and static Web ads it sells on WSJ.com.

Ad rates: The CPM for video on WSJ.com is $90. For more information, see the video sales sheet.

Web video ads offered:

A 15-second pre-roll

A coordinating 300×250 ad unit that is visible above the content space during the pre-roll video

An expandable reminder unit that remains to the right of the video “You Are Watching” headline. When a user clicks “Expand”, the 300×250 unit displayed during the initial video pre-roll ad will reappear, enabling further user interaction.Integration: The Wall Street Journal sells video advertising packages that run across the Wall Street Journal Digital Network, which includes WSJ.com, Barrons.com, MarketWatch.com and AllThingsD.com.

Past clients: Recent video advertisers include Skyy Vodka, Cisco, IBM, HP, Jaguar, Knight Capital Group and Mercer Consulting.

CondeNet
The Conde Nast magazine empire’s online incarnation includes properties such as Epicurious.com, Concierge.com, Style.com, Men.Style.com, and Flip.com.

Web video ads offered:

Pre-roll ads

Companion Ads (300×250)Integration: CondéNet has established relationships with major portals including MSNBC, Yahoo!, YouTube and other video sites to distribute its content and accompanying ads.

Past clients: American Express, Visa, Bertolli, Hilton, Nestle, Haagen Dazs, Charles Schwab

Ad Prices: Flat Fee Sponsorships or CPM. CondeNet declined to share details on pricing.

Advertising Age
This Crain publication, a sister to WebVideoReport.com and TelevisionWeek, is the leading news source covering the advertising industry.

Ad rates: Flat rate for pre-roll only, custom pricing for integrated programs. For instance, a video ad in the Garfield’s Ad Review feature costs $15,200 for four weeks and $124,800 for 48 weeks.

Web video ads offered:

Pre-roll

Video in bannerIntegration: AdAge also sells Web-video ads packaged with standard online, print, mobile, RSS feeds, and events

Past clients: A&E, Video Egg, Meredith

WEB VIDEO SITES
YouTube
YouTube, the biggest video sharing site, hosts user-generated and professionally produced content. The site, a Google subsidiary, is experimenting with ways to wring revenue from its content, offering a variety of Web-video ad formats.

Ad rates: According to parent company Google’s Web site, advertising on YouTube requires a $50,000 spend within 90 days. On brand channels, advertisers must spend $250,000 across Google and YouTube, including $100,000 or more on YouTube only. A YouTube home page roadblock is a $100,000 per day flat fee plus a $100,000 incremental spend on Google and YouTube within 90 days. The company said on its site: “Currently you can apply to advertise directly with YouTube if you’re willing to spend a minimum of $50K and you’re interested in running a large branded campaign. This advertising option requires an authorized contract or purchase order with YouTube, and ads are served on a reservation-purchase basis, rather than the AdWords auction model.” For more information, click here for their guide. Companies wanting to advertise on YouTube for less can sign up for Google AdWords for as little as a $1 CPM.

Web video ads offered:

Home page video ads

Video ads

Traditional display ads

No pre-roll adsIntegration: Through Google’s content distribution via AdSense, YouTube video units are syndicated to Web sites across the Google Content Network. There have also been integrations, for example, between Google Gadget ads and contests on YouTube.

Past clients: Adobe, Verizon Wireless, Samsung, BMW, MGM

MetaCafe
Metacafe is one of the first generation of video-sharing sites. The site offers short-form, original video content that gives users entertainment breaks. The sites users identify the most popular videos and the site’s producers’ rewards program pays video creators for their best work, as determined by the viewers.

Ad rates: Rates range from $10 CPM to $35 CPM, depending on placement. The rate card for pre-roll, and home-page sponsored video units is $35. The rate card for overlay ads is $20, and a static companion ad runs from $10 to $20.

Web video ads offered:

Home page player

Search results page player

Pre-roll

Overlay

Companion ads next to pre-rolls and overlays (300×250 to right of player and 468×60 below player)Integration: Metacafe said it offers a range of ad programs, such as basic in-stream options of flash overlays, and pre-roll and post-roll ads. The site also offers accompanying companion units as well as customized home-page programs, mash-up tools, custom content integration, as well as various types of product placement.

Past clients: Adidas, American Apparel, Axe, American Online, Activision, Barilla, Carlsberg, CanalSat, Canon, Coca Cola, Colgate Palmolive, Dove, Ford, Gillette, Goodyear, Heineken, Heinz, Kodak, Lancome, Lego, LG, Match.com, Merck, Mentos, Microsoft, Miller, MTV, National Geographic, Nike, Nokia, Orange, Orbit, Palmolive, Peugeot, Pepsi, PS2, Playstation 3, Real Networks, Renault, Rockstar, Samsung, Sega, Skype, Snickers, Sony Ericsson, TCM, 20th Century Fox, Ubisoft, Universal Pictures, Virgin, Visa, Vodaphone, Xerox.

No Good TV
No Good TV (www.ngtv.com). No Good TV is part of the profusion of ventures creating short content and syndicating it across the Web. The site recently caught the attention of the traditional TV community, and syndicated evening show “Extra” will be integrating No Good TV segments into its Monday-Friday program.

Ad rates: CPMs range from $15 to $40 and vary based on length of term, extent of exclusivity and customization. All sponsorship agreements are customized for each individual client.

Web video ads offered:

Banner ads

Overlays

Skyscrapers

Alpha video

Transitional pages and full channel sponsorship

Pre-roll and post-roll (15 seconds or less)

No Good TV can also create “parody” pre-roll, post roll and full promotional spots using real products/brands in a humorous scripted vignette.

Sponsorship agreements can range from traditional banner ads to integrated original live-action or animated short-form series programming.Integration: No Good TV said it offers customized and strategic product and brand integration into the program content. Advertisers integrated into No Good TV’s show also gain additional exposure on YouTube, which carries a No Good TV channel, which is currently the fourth most-viewed YouTube partner of all time. Additional brand exposure includes event presence and party sponsorships.

Past clients: Microsoft’s Halo 3, Universal Studios, Sony and Avid

Break.com
Break is a video-sharing site that aims to engage young male viewers that advertisers are interested in reaching. The site shows over 12,000,000 videos and 5,000,000 pictures daily.

Ad rates: Traditional placements range from $10 CPM to $35 CPM. Rates for video placements and custom sponsorships vary by project.

Web Video Ads:

Flash overlays

Pre-roll

In video bugs

Accompanying companion unitsIntegration: Break lets clients advertise within original content and user-generated content. Break also can integrate brands into its rich media ads. In addition, Break will develop customized sponsorships such as home page programs, content integration, and product placement.

Past clients: Anheuser Busch, Axe, Burger King, Diageo, EA, Honda, Jim Beam, Keystone, MTV Networks, NBC Universal, Nike, Paramount Pictures, Universal Pictures, Sony Pictures, Verizon, Viacom, Vivendi Games, Warner Brothers Home Video
SOCIAL NETWORKING SITES
MySpace
MySpace, a News Corp. business, is the biggest social networking site. The Web site users set up pages into which they can plant music and video, and MySpace offers entertainment channels with exclusive, original music programs, as well as video shows.

Ad rates: A pre-roll video in the music section of MySpace.com (15-second video with a 300×250 pixel ad unit) carries a $25 CPM.

Web video ads offered:

Pre-roll

Mid-roll

5-second pre-roll bumpers

Banners and display ads also live on pages with videoIntegration: MySpace ads are sold solely on MySpace.

Past clients: Ford, Toyota, Hairspray the Movie

New Emerging Solutions:  PodTech, Facebook, LinkedIn

There are many left out like PodTech which does custom ad solutions for viral social media, Facebook the leading social networking site, LinkedIn – the leading B2B contact mgt and business social portal, and handful of ad networks.   Outside of PodTech, Facebook, and LinkedIn the rest of the market is similar to what is outlined below.  PodTech, Facebook, and LinkedIn offer an entirely different value proposition than CPM based solutions.  For more on why I think PodTech, Facebook, and LinkedIn are valuable  see my post on Microcontent for Microtargeted environments.

Social Networking Online Advertising – It’s Video but not Pre-rolls

This is a repost from an email that I received from Sam Levin.  Social Networking online advertising opportunity is not about Facebook or some social network.  To me it’s about video advertising.  Broadcast TV ads are moving to the web.  It will be video that cracks the high yield advertising value proposition, and it will be the biggest money maker. 

——- Social Networking is Hot

This year, 37% of the US adult Internet population used online social networking at least once a month. That figure will rise to 49% in 2011.

”The continued growth of social networking seems assured,” says Debra Aho Williamson, eMarketer Senior Analyst and author of the new report, Social Network Marketing: Ad Spending and Usage, “unless teens stop social networking as they become adults.”

Don’t bet on that.

Currently, 70% of all US teens visit social network sites on a monthly basis.

“By 2011, one-half of all online adults and 84% of online teens in the US will use social networking each month,” says Ms. Williamson. “There is little to suggest that this activity will go away.”

When it comes to translating eyeballs into advertising revenues, eMarketer projects that worldwide online social network ad spending will grow from $1.2 billion in 2007 to $2.2 billion in 2008, 82%.

Worldwide spending will top $4 billion in 2011.

In the US, spending is projected to rise to $1.6 million in 2008, from $920 million in 2007.

”MySpace and Facebook together receive more than 70% of all US social network ad spending,” says Ms. Williamson. “And they are hard at work to convince marketers to allot more of their budgets to social network advertising.”

The advertising offerings of the two social network giants are becoming more diversified, and now include not only profile pages but search, display ads, widgets and more.

“But if social network marketing delivers on its promise of peer recommendations the flow of advertising dollars will turn into a flood,” says Ms. Williamson.