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Think Big. Move Fast.

Over at NewTeeVee, Liz Gaines says that Ad startups are turning away from user generated video. She says that all of the online video ad startups that she is interviewing these days are focusing on professional video over user generated video, calling out Kiptronic, Blinkx, DigitalSmiths, Brightroll, YuMe, Adap.tv and Broadband Enterprises by name. She says that only Scanscout hasn’t dissed UGC.

Liz did omit from her list VideoEgg, which is taking on monetizing UGC head on (with social networks like Bebo, Tagged, and Dogster among its client list) and making some good headway. Notwithstanding what they told Liz, Brightroll is also serving a lot of UGC video sites.

But Liz is right, advertisers prefer professional video inventory. The market has spoken. These startups are going to where the money is, and today, its easier to monetize professional content than user generated content.

However, there are a lot of “shades of gray” between professional and user generated video. Its worth while parsing out some of the issues that separate the two:

    Professional content can guarantee no “Objectionable content” that would be problematic for an advertiser (e.g. hate speech, risqué content, violence etc); UGC can not.
    Professional content can guarantee to not have copyright/rights issues; UGC can not.
    Professional content tends to have better metadata for targeting advertising than UGC.
    Professional content tends to have higher production values than UGC.

The first two of these are show stoppers for many advertisers. Proctor and Gamble or Budweiser just can’t afford to have their ads show up next to videos of naked people, neo nazis or street brawls, or against copyrighted content.

The other two are a matter of degree – they just affect CPM. Diggnation for example, which comes close to UGC on production values and has limited metadata for targeting, has no problem getting advertising because it keeps on the right side of the line on the first two points.

I think that if we see user generated video that can guarantee no “objectionable content” and no copyright violations, and if it has the ability to target ads well (e.g. through a synthetic channel, or behavioral targeting), then lower production values will not prevent a healthy market for advertising against this inventory. Examples might be sites like Turn Here, Diversion Media and VoD Cars.

I’d love to hear reader’s thoughts.

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