I was watching an episode of The Simpsons on Hulu and thought of writing this post. Around six months ago we wondered how YouTube would find ways to monetize their business. At this point in time, they already have an advertising program in place and serve over 100 million videos a day. Their revenue potential out of video advertising is estimated to be over $150 million (a very rough estimate). While there are many roadblocks that YouTube and many other ‘legitimate’ video-sharing websites need to surpass in a free world of content-sharing such as copyrights violation, content protection, etc., there are a few things which are certain (as time has told):

• While one can not say for sure if TV will be extinct in the next couple of decades, one thing’s for sure video is here to stay on air or online!
• Television shows, movies and other videos online present new opportunities for companies to market their products and services.

• More and more production companies and studios are accepting these online avenues to syndicate their content. Some also willing to start off on their own such as Hulu.com (started by NBC Universal).

So what’s so great about advertising on video-sharing websites, anyway?:

• It’s more about the combination of contextual and video advertising that is very appealing. The consumer does not click to visit the website of the advertiser or his specific landing page for that ad but rather clicks to watch a video. The idea of watching a video is in itself a much enriching experience than visiting a website.
• Search engine advertising was excellent business model as it was non-intrusive and contextual. Video advertising has the same benefits but more (only in case of YouTube). From the perspective of a business, a video advertisement let’s you send out a much more ‘fancier’ message and can ‘emote’ your message better. For example, check out this Cheetos advertisement the brand is truly personified - bold, mischievous (and ridiculous I think! :)):http://www.youtube.com/watch?v=TPuq8F8_SR0

What are the cons?:

• Intrusive opportunities of video advertising may not be favored online, such as those provided by Hulu.com where videos are sponsored, meaning, they show ads while the video is being played just as a commercial break on TV. I really doubt people are used to such intrusive advertising in this age.
• Video advertising is costlier than search engine marketing compared to search engine marketing. Period. Click here to see some stats.
• Video advertising has additional costs of production attached to it compared to search engine advertising where you need a simple text copy.

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