Wallen's

DailyMotion is profitable

The new CEO of DailyMotion, #2 to YouTube, announced today (interview in french) a new round of financing of €15m ($22m). This follows two rounds totaling $44m in 2006 and 2007. More interestingly, he announced that DailyMotion was now profitable despite the downturn.

They plan €15m revenues in 2009 for 60m unique visitors, i.e., €0.25 ($0.35) revenue per unique. However, having launched monetization recently, he mentions that less than 10% of videos include advertising. Hence he expects a very strong topline growth going forward with at least 50% in 2010.
All in all, considering the 90% untapped videos, this means that the standard guess estimate of € 1-2 advertising revenues per user for social networks is achievable. That's good news!

They also plan to broaden their thematic channels offering, expand in IPTV and they are pondering whether to move into VOD. This could improve (or not?) their monetization potential.

A map on advertising business model

After my last post on freemium, here is a map on the advertising business model. There are so many angles and views on the topic that it's impossible to cover everything. I don't know if it's a "good" revenue model but here is the way I look at it (simplified): ads brings benefits to their buyers so it must be a recurring source of revenues... though only sufficiently high under certain conditions, the most important of which today being "massive scale"... The web is not very different in that sense than most other media sectors, e.g. the most successful TV channels are free and live mainly of advertising - size is king with ad, small niche is difficult.

Why do I think this ? Just click on the pearl below then on the play button and the arrows.

NB: if you have some relevant posts to complement this map, don't hesitate to post them in the comments.

Advertsing prices relatively stable in Q4 2008

PubMatic just released its Q4 2008 figures for eCPM advertising pricing. You can find the full report here. While it is not a fully representative benchmark, this report seems to be directionnaly correct. The main message I take out is that Q4 prices are relatively stable vs. Q3 (-3.7%, i.e., within the margin of error of such a benchmark). This is a good suprise given the economic environment but it could be due to seasonal effect (i.e., holiday advertising). There is in any case a continuous downward trend of ad pricing when we look at the figures since Q4 07.

Web 2.0 advertising revenue model can work… sometimes

I’ve been reading a lot lately about the never ending debate on monetizing Web 2.0 products with an advertising based revenue model. There are quite a lot of skeptics out there. Why is that? Web 2.0 is after all just another media channel for advertisers along with print, TV, etc. So why would it not get its “fair” share of advertising budgets in proportion of the audience it attracts? Why would the current eRPM ratio of 1 to 25-30* between TV and social networks remain in the medium term?

Some say there are targeting issues. Others argue that advertisers are afraid of putting their brand beside content they can’t control. Another argument is the traditional media large reach. These are maybe fair points today but TV relies mostly on socio-demographics targeting – a technique that Web 2.0 companies can be very good at. In addition, given media consumption trends, there will be quite a few Web 2.0 products with large reach.

This not to say that all Web 2.0 products will be successful with advertising. Indeed, media channels successful with advertising have a common characteristic: an excellent fit between content format, advertising format and user’s purpose/values. In a fashion magazine, a Channel ad fits naturally with the content and the audience’s reason of reading it. At Google, content is a list of links, ads’ format is also a list of links and the users are there to search for links.

It is true that Facebook or MySpace have an issue of putting together these three elements at this point in time. However, other Web 2.0 sites could find this fit between the three dimensions. For example, a recent idea (read here and here) on having paid songs included in online radio could be a good candidate (though a right balance must be kept in order not to contravene to the user’s purpose). Professional networking sites are also well positioned with certain type of advertising. Xing – a publicly listed competitor of LinkedIn in Europe – manages to obtain USD ~7-8 eRPM from advertising only (including job listings). It’s not yet traditional media levels but it’s already quite good.

In other words, there are no inherent properties in Web 2.0 preventing monetization from advertising. Those companies that have a good fit between content format, ad format and user’s purpose/values will be able to generate revenue from advertising.

* Source : USD 13-15 for TV from comScore report “Online is the New Primetime” vs. USD ~0.50 for social networks from PubMatic figures assuming 2 ads per page