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Video: How to Make Money With OTT
Ben Miller of Sinclair Broadcast Group discusses strategies for making subscription and advertising-based business models for making OTT content delivery profitable.

How do you drive online and OTT video content consumers "down the monetization funnel" that will make your content profitable? Sinclair Broadcast Group's Ben Miller takes viewers step by step through that process, including how to leverage "casual viewer" channels like YouTube and Facebook to convert casual, occasional consumers of your content to dedicated subscribers that will make your brand successful. 

Read the complete transcript of this clip:

Ben Miller: What's interesting about being in the broadcast space and being in digital is really the “broad” part. We hit a broad audience. In order to hit a broad audience, you need a broad product offering, you need to be everywhere where the audience is, and so when we look at OTT, step one is you have to have an audience. Step two is you have to have an engaged audience, and then step three is, you make money with that audience. So we see all aspects of this in the business that we run. It's really about the tiers of the advertising revenue, so there's what we call “backfill advertising.” We can set our watch by it.

On the video side, it's actually pretty good and growing, particularly with programmatic. Then, there's direct sales to heavy run clients, particularly at the local level where the advertising money is very, very good because we're hitting a niche audience again. I think that in the middle are these distributing deals where we push our content out, there's a middle man in between, we're getting advertising money but it's getting carved into and that is exactly the funnel that you've talked about. I think what's really interesting in a multichannel video distribution world, and the way that we look at it is it's really a highway. It's a cloverleaf, right? It's this infinity loop that people are on.

They're already on it. You don't have to push them there. Facebook pushed them there, YouTube pushed them there, that's how they work now. They move from one medium to another. They're motivated to go to that medium by different things. They're looking for different things when they go there, they're willing to pay or deal with certain interruptions in the experience differently. They're willing to consume content at longer lengths or shorter lengths, they have a different expectation of the format and the form of the content, and so for us, we need to understand that. The subscription model is a really interesting destination.

That is the panacea and it's a model that's been proven out. It got proven out in the '50s with magazines. They proved they can build niche content audiences, get them to pay for the subscription, get them to drive the content largely, interact, write letters to the editor, and then they can sell massive amounts of advertising--and by the way, there are still magazines doing it. Cosmopolitan is a great example of a magazine that's still killing it in this space. The model we know works. When you moved that model to the cable side, you lost some of the niche. You lost some of the narrowcasting that the niche gave you, and the nice thing about digital is you can recapture it, but you have to build a product that recognizes along the infinity loop there's an opportunity to address the audience differently.

You have to get them the right product with the right content. The cost of goods sold--to an extent, you need to seamlessly build that into your production process so that you are on the way through doing your production, creating all those assets in those different ways that talk to one another, cross-promote, play into the ways that people are motivated and triggered to be motivated to come back to your other properties.

The industry data shows people consume more content, not less. Almost twice as much, and so if you take advantage of this, not only do you not cannibalize your audience, not only do you not lose money, not only do you reduce your total cost of goods sold because you're getting more content to more people, but you have a potential to almost double the actual ROI on your content production. But it isn't magic. You have to be really careful.

You have to have a plan to drive people down the monetization funnel, you have to use all the different channels at your disposal. On YouTube, it's a casual visitor. On Facebook, it's a casual visitor. How do you convert that casual visitor to a more interested visitor? How do you get them to pay a little more, spend a little more time, come to a first party property? How do you get them to subscribe to get rid of the ads? As you do that, if you're paying attention, and then how do you engage your creative production staff, whatever that content is, to take advantage of that, look at the analytics, understand who their audience is?

Is it tween girls? Is it people that play sports? Is it high school football players? Who are these audiences that you need to reach that you can reach? How big are they, and how do you make it all part of the seamless production flow so that you can take advantage of every possible monetization strategy you can along that path?

The nice thing is, we now have years of data we can look at, and we have the benefit of some of these larger, more successful brands, and they're showing us the way. All we have to do is look, look at the data and follow the path, and then we can innovate and be innovative content producers, innovative product developers, and there's a huge opportunity for everyone in this space.

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