Summary
The deemphasizing of user generated video could be a great strategy to attract more valuable advertisers and keep video product eCPM's high.
Analysis
From a monetization standpoint advertisers tend to bucket video buys into 3 categories:
1. Premium: Defined as valuable, editor controlled, high quality, quality assured content that run across the web:
1A. Examples: MSN Video (MSNBC clips), ESPN motion, CBS Marketwatch content
2. Syndicated Content: 2nd tier content, that has some consistency in terms of viewing experience and some level of editing
2A. Examples: Blip.Tv, Brightcove's syndicated network
3. User Generated content: No quality, copyright, or editorial controls.
3A Examples: Google Video (YouTube) Joost
Two key elements still drive advertiser spend (especially on the display side): content and ad size. With these video products, advertisers are more likely to spend 8-10x (in terms of CPM) for video ads in premium content versus user-generated content. They know the experience is controlled and feel it is something they can put their brand in front of. Video advertising in front of video content tend to be ad network based buys, or in the case of Google, performance-based buys.
The decision for Yahoo to potentially focus on higher quality online video content could be a great win from an advertiser perspective and allows Yahoo to stay clear of the current user-generated digital rights, lower monetization and higher cost issues plaguing Google at the moment.
