Mark Cuban wrote an interesting blog today "Internet Video and how the broadcast nets are missing the HDTV opportunity". Mark makes lots of good points about the future of Internet video that deserve a post all to itself. One of the main points is that Google/Yahoo/Microsoft will be the gatekeepers and consolidators of Internet Video and be the "one stop shop" for advertisers.

Then Mark segues into the HDTV opportunity where he says HDTV will kill Internet Video. I disagree, but more on that in another post.

On the future of Internet video, Mark says;

"If its a hassle for ad buyers to buy 100 TV networks, how much of a hassle do you think its going to be for them to buy 100 websites and get them audited ? Whats more, what do you think all those Web 2.0 sites who are easily selling video ad inventory today because its a nice experiment for advertisers do when they cant sell their video inventory any longer ? Or when the biggest advertisers tell them they have to work through a publisher network like Yahoo or Google in order for them to get a buy ? Well, the first thing they are going to do is lower their ad prices. Which is exactly what we saw happen both on smaller digital video networks and on websites trying to sell display advertising. Its history repeating itself."

To summarize, Internet video advertising rates will fall due to saturation of sites, and advertisers will only buy ads through major publishing networks like Google, Yahoo, and Microsoft to maintain quality, auditability, and ease of management.

Advertisers, Publishers, Consumers - There are three sides to the Internet advertising puzzle; the Advertisers who pay for it, the Content Publishers who create or aggregate the content and take the money, and the Consumers who watch/read the content and click on the ads. We are Consumers so we tend to look at everything through that lens. Google has been successful because it has found a way to satisfy all three sides of the equation.

Web Advertising - Advertisers get to target their ads and only pay when a consumer clicks. The millions of small web site content publishers (long tail) get an automated way to put ads on their sites and let Google collect the money and pay them a royalty. Consumers get a great search experience free of ad banner clutter, and actually find the targeted text ads helpful.

Radio Advertising - Google will take the same model to radio advertising with its dMark Broadcasting acquisition. Initially there will be very little ad targeting. The main "value add" will be the ability for the advertiser to efficiently place and track ads on lots of different radio stations, all from one console. The radio stations may be able to auction their ads to the highest bidder, rather than use ad sales people to sell off a rate card.

Video Advertising - Google, Yahoo, and Microsoft could again apply to same model to Internet video. The key to success here is to build a comprehensive network of sites that offer lots of video content. Then use technology to target the ads to the relevant content. The YouTube acquisition certainly helps build up an inventory of content, and an audience of users.

Mark Cuban's point about advertisers wanting to place, and track, ad buys through one source or network applies to all three markets; web, radio, and video.

What is the next logical step? TV, Newspaper, and Magazine advertising. Why not apply the same economies of scale, targeting, tracking, and reporting to the TV, Newspaper, and Magazine advertising buying process? Google is all about making the advertising process efficient for advertisers and content providers. Search was just the first implementation. Why not do the same thing for all forms of advertising.

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