“Eventually, we all know, that mythic convergence that people have been talking about for God knows how long is happening,” Mr. Lewis said, referring to the integration of news across platforms. “So this is a little ahead of the game. We got a good jump-start.”
And they aren’t the only ones.
At a time when banner ads are getting dwindling returns, media outlets from The New York Times to Vice are beefing up their video departments to figure out how to cash in on online ads. Unlike print content and its corresponding banner ads, video creates a captive audience for advertisers, and pre-roll spots go for way more than traditional display ads.
“Online video ads is probably going to be the fastest-growing segment of the Internet this year in terms of percentage,” said Brad Adgate, senior vice president of research at Horizon Media. “There is an evolutionary process going on here, and as connection speeds get faster and you get more professionally made content, you are going to see more online ads.”
The Huffington Post seems to have gotten in on the game early, or at least early enough. Advertisers will pay more for viewer engagement, which, as the constant stream of comments attests, HuffPost Live has in spades. Whether video is a momentary gold rush or a long-lasting change in advertising dollars and news consumption is undetermined, but organizations are placing their bets.
HuffPost Live sells display advertising on the live stream’s main page and pre-roll commercials that run before on-demand clips. In general, pre-roll commercials run about $20 CPM (cost per thousand impressions) while display ads go for closer to a dollar, according to Media Kitchen’s president Barry Lowenthal, who advises brands on where to advertise.
Unlike banner ads, which are basically a web adaptation of magazine advertising, video is being heralded as the next frontier, which seems obvious when you consider that even legacy organizations are pouring money into video.
“If you have a video model, you can essentially run television commercials,” said Andrew Essex, CEO of advertising network Droga5. “The web is emulating TV more than it’s emulating print, in terms of its ad supported contextual structure.”
Mr. Adgate agreed with that assessment. “You are comparing online ads to video, but I’m looking at them and comparing them to television,” he said when we asked him to contrast display and video ads.
And therein might be the genius of HuffPost Live: by rolling for half of the day, it can provide virtually unlimited clips for the main site that can be teased out and used as content.
“We always designed it as a clip-generating machine, knowing that VOD is how people consume things online currently,” Mr. Lewis said. “And the live part is a longer game. Part of the thought behind those 12 hours was so we could generate those clips.”
So is HuffPost Live the answer to the vexing question of how to monetize video content? Well, maybe—if you’re the Huffington Post.
“For Huffington Post and AOL, this was the right solution for this particular business,” Mr. Lewis said. “Should every site launch a HuffPost Live? Probably not.”