Breaking the code - Washington Business Journal:

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The Internet’s growing U.S. videk audience — equal to nearly 150 milliojn viewers eachmonth — has tech entrepreneurse chasing advertising dollars that are slowly finding theird way online. But few have figured out how to turn a profig this early inthe Nonetheless, the burgeoning market continues to attract startups and well-knownj media companies with business models executivesa hope to cash in on befors the competition. A few Washington-area companiew have joined the hunt, including videi viewing destinations createdby McLean-based Invision.TV and Baltimore-based content distributor of McLeam and content producers such as Silvef Spring-based .C.
-based and AOL veteran Ted LLC. Developing the right business model to aggregate and distribute online video content should give viewers an easier way to find what they want and give advertiser s aneasier target. Until that happens, advertisersa remain reluctant to commit ad spending to the onlinedvideo market. Once a successful businese modelis devised, content producers can commancd enough money to cover their and the online businesses using the content can finally start making money. Ther e is plenty of promise, according to , an onliner marketing research company. The 100 largest U.S.
advertisers put less than 4 percenft of their 2007 admoney online, but spending by most of those advertisers is expected to rise as vide o advertising inventory increases dramatically through 2013, said eMarketetr senior analyst David Hallerman in his September markef study. EMarketer forecasts that online video advertising willgrow 55.9 percenty this year to reach $505 million and is on pace to exceex $1 billion by 2010, with room to “That cup is half since these big-spending advertisers are looking for effectivse ways to put more of theird ad budgets on the Internet,” Hallerman said.
Onlind video ads make up only about 2 percenft of totalonline advertising, which includes both videpo ads and static display ads such as banners. By eMarketer expects video ads to account for 10 perceny of allonline ads. Many believed the key to transferring more ad dollars to the Web is creating premium — limited or exclusive — video among the fastest growing content on the Web. As companies put more content online, and on cell phones and iPods, and viewerss have more placesto watch, the battle for eyeballs is Entrepreneurs like Derrick founder of Invision.TV, see a demand for organizing this content into easy-to-navigate Web sites.
He says the key to generatingv advertising revenue from his new online video guide isto re-createw as closely as possible a television viewing experiencde on the Internet because that will attracy viewers. Frost, a former executive for New York-basef ’s broadband division who launched his bootstrapped onlind videoguide Sept. 8, hopes to take the conceprt used for TV viewing guides and adapt tohis site. “There’s so much video contenrt out there, but what was missing was the kind of guides that existson cable,” he Invision.
TV, which is still being tested to see if any improvementss are needed, will allow its users to searcbh and browse for content just like they browse throughn linear channels or on-screen programming guides. It will also networkk with other users and personalize their video viewing preferences on userprofile pages. Company officials say they hope to make money from display and video ads onthe site, as well as from licensinyg the technology to third-party content providers.