Take Over YouTube's Homepage, It's Only $400,000

According to Interpublic Group’s Magna forecasts, online video ad revenues in 2009 were supposed to jump 32% to total $699 million. At that rate the industry will hit over $1 billion in advertising revenue by 2011. A recent eMarketer report claims online video ad revenues hit the $1 billion mark this year, and will continue to grow to $5.2 billion by 2014.

Regardless of which numbers are more accurate, that’s a lot of cash. In an in intriguing article over at Advertising Age, Michael Learmonth shows where online video advertisers are spending big chunks of that cash and reveals how much they’re paying. Here are some particularly interesting finds:

• YouTube Homepage costs $400,000 a day – With over 81 million monthly unique visitors, YouTube is selling its traffic as much as it sells video. Homepage takeovers are a mix of both, incorporating more traditional display ads with interactive banners and promotional videos.

• ESPN Channel on YouTube sees $22 CPM – In July, YouTube began letting third parties sell and insert their own ads into their videos. The idea is that if YouTube gives its premium content publishers the tools with which to effectively sell their own programming, the content will see higher ad rates and free up YouTube personnel to sell things like the YouTube Homepage. If you believe the reported average YouTube CPM numbers, it seems to be working.

• Hulu sells a $35+ CPM – As Learmonth notes, “The key here is great content combined with limited inventory. Hulu caps the ads at four per hour despite grumbling from network partners that want to see TV generationg more revenue on the web.”

• Wall Street Journal Video CPMs run $75 to $100
  – Even the New York Times admits that Wall Street Journal videos are lucrative. If you combine a dedicated, affluent readership with timely video coverage of current events and national issues, you can charge these kinds of dollar amounts.

• ABC.com Full Episode Player charges a $45+ CPM – Way back in 2006, ABC was the first network to test and fully embrace online distribution. Being early to the internet seems to have paid off. If ABC.com is seeing these kinds of rates, it’s no wonder the network was hesitant to add its shows to Hulu.

Learmonth admits his methods of data collection weren’t exactly scientific (the numbers were “culled from agency buyers and media sellers”), but they offer an interesting insight into what well-known online video properties are charging for premium content and exposure. Just like on television, advertisers are willing to write big checks in exchange for huge audiences and brand placement in front of high-quality programming.

What does this mean for online content creators that don’t produce WSJ or network television shows? I think it’s encouraging. Advertisers are obviously growing more comfortable spending bigger budgets online, and not every penny of those budgets will be spent on Super Bowl-like buys. As mentioned above, online video ad revenues are expected to reach $1 billion by 2011 (or $5.2 billion by 2014). If only a percentage of that pot goes to programming created outside of television studios, that’s still a big money pool in which lots of independent content creators can play.