When it comes to Internet TV 3 questions are common for beginners:
- Can I make money with my network?
- How do I make money?
- How much can I make?
Q1 – Yes
Q2. I am going to assume you are already familiar with “Monetization techniques” for internet TV (OTT)…if not click here to read about it. .
Q3. Well that’s what this article is about…read on;
The most common way to make monetize your online network is through DAI which stand for Dynamic Ad Insertion (and for the sake of this article I will mainly concentrate on this method). DAI allows advertisers to swap out creative ads in both linear, live or video-on-demand, content. This is done instead of servicing the same ad to each consumer (like in traditional TV). With online video we can understand more about our audiences and their interests and only serve particular ads to our audience based on those interests.
This means we can have viewers in different locations watching the same stream, but serve them with different ads.
However the rule of thumb for internet advertising remains; channel owners are paid on a CPM basis. CPM which means “cost per metric” really translates to “Cost per thousand”.
Cost Per Thousand means how much is paid per 1000 impressions of an advertisement. This means your viewers have seen an ad 1000 times. This could mean 100 viewers watch an ad 10 times in an evening or that 200 viewers watched the ad 5 times… and for most cases it does not mean that 1000 people had to see the ad. Its impressions or better yet, its views, not viewers.
In the internet TV world CPM’s can vary on a sliding scale:
Smart TV and connected TV”s CPM can be between $8 and $20.
Mobile apps between $6 and $10
Desktop between $2 and $6
As you can see depending on what platform your viewers are watching your content makes a big difference in how much add revenue you can make.
You will want to use DAI for your streams and your VOD’s.
To determine your potential monthly ad revenue of your online network you must predict how many views your content will receive and then calculate that with your CPM. To do this examine your current fan base and understand your average view count for each video on your network and then multiply that by the amount of videos you intend to release each month (to give you an idea of total views).
Once you have that number then use the formula below to calculate revenue:
(CPM(# of views))/1000=Total revenue
Now lets just make a simple scenario;
Lets say your network had 30,000 viewers that each tuned in 10 times during the month, giving you a total view count of 300,000 views for the month…and lets say your getting a $15 CPM cause your on smart TV’s.
So that would be 300,000 X 15 divide by a 1000 = $4,500 in DAI revenue.
However this is not the whole picture….because you must also account for how many impressions you have in an hour instead of accounting for 1 impression per session.
Let me give you another example using the same CPM.
1000 people watching your 1 hour live event (or live stream) with 4 ad avails of 2 mins each per hour.
This means in one hour you have 8 minutes of possible ad time. That would be 4 thirty second ads for each avail. This equals 16 impression per viewer for the hour.
So now your impressions for the hour is 16,000 (impressions multiplied by how many viewers).
So now if you had a CPM of 15 dollars you could figure out what you made for that hour:
16,000 X CPM (15) / 1000 = $240 for that one hour.
This of course varies depending on your fill rate of your avails but should give you an idea of the possibilities.
The bottom line is this: The more people watch, the longer people watch, and the longer your avail times for ad insertion = the more money you make in DAI.
Keep in mind that this was referring to add insertion into a streaming channel (linear) but the same principal applies to VOD. Having pre-rolls and mid-roll ads inserted dynamically into your VOD’s will increase your ad revenue greatly.
Now back to our first example of 30,000 viewers tuning in for the month. Depending on how many impressions each viewer saw (how much time they spent watching your VOD’s and streaming channel) will indicate the actual revenue received. 30,000 viewers could equal $4,500 or it could equal $45,000 depending on all of those variables.
The longer each viewer watches and the more ad avails that are filled (per hour)then your math starts to ad up because now your impressions are much larger.
Now lets talk about subscription verses DAI.
Charging a monthly subscription is a common way to monetize your content. Netflix is an example of how subscription services can really be a viable option.
Typical questions we get is “how much should I charge for my subscription network” ? The best answer I can give you is this; The more niche your network, the more you can charge.
In other words the more targeted your audience the higher you can price your monthly subscription.
Other questions such as; Are there other competitors competing for that same audience? Look at other niche networks,…what are they charging?
Let me give you some make believe samples of “extremer niche”:
- A ball room dancing channel
- A golf channel that focuses just on teaching golf techniques
- Channels that cater to languages not commonly spoken in your home country
It can’t just be a standard channel targeting standard entertainment if you want to charge a subscription. The only exception to this is of course Netflix with has thousands of video titles to choose from.
You have to know your audience and as a channel owner/operator you are the best to know what you can charge and what you can not.
To give you an idea I see our customers charging their viewers between 1.99/month on the low end and as high as $29.99/month on the high end.
Whats great about subscriptions is you are monetizing all of your views the same….no matter if they spend one hour a month watching or 50 hours a month. You can predict your revenue and
You can mix and match by providing a paid/premium version with out advertising and a free version of your channel with ads.
There is not “one answer fits all” when it comes to monetizing your online network…but you should have some idea by now.
Want to take the next step and start your network? Read about our Channel Manager Here.TvStartup