Internet video
Blodget's got two long posts on the economics of online video: here and here.
He argues, rightly, that the long-term margins in the space are likely to be in the 10-20% range for the winners, as opposed to the 30-40% range achieved by traditional, text-based internet media. He is estimating long-term CPMs at $15 and assuming that only a fraction of videos on the main sites will be monetizable (30% for YouTube).
I think Blodget is underestimating the CPM levels achievable via a video site. What's critical is the attention the site draws - and it's entirely possible to monetize this attention in ways that traditional pre / post roll ads don't. Break.com, for example, does tons of custom, agency-like work that is probably generating considerably higher effective CPMs than Blodgett is forecasting - thereby probably blowing through Blodget's profitability boundaries.
He argues, rightly, that the long-term margins in the space are likely to be in the 10-20% range for the winners, as opposed to the 30-40% range achieved by traditional, text-based internet media. He is estimating long-term CPMs at $15 and assuming that only a fraction of videos on the main sites will be monetizable (30% for YouTube).
I think Blodget is underestimating the CPM levels achievable via a video site. What's critical is the attention the site draws - and it's entirely possible to monetize this attention in ways that traditional pre / post roll ads don't. Break.com, for example, does tons of custom, agency-like work that is probably generating considerably higher effective CPMs than Blodgett is forecasting - thereby probably blowing through Blodget's profitability boundaries.
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