Content really IS king

Content really IS king
By Paul R. La Monica

What do you do when you are online? Based on some figures from the Online Publishers Association, you're probably reading blogs, watching videos and checking out your friends' pages on MySpace, Facebook and other social networking sites.
The OPA released a study Monday which showed that content now accounts for nearly half - 47 percent, to be precise - of consumers' online time. The numbers, compiled by Web research firm Neilsen//NetRatings, showed a marked increase in users' appetite for content from four years ago. In 2003, just 33 percent of time was spent online viewing content.

Four years ago, communciations, i.e. e-mail and instant messaging, ate up most Web users' time, accounting for 46 percent of time spent online. Now, communications accounts for just 33 percent of time spent on the Internet. There wasn't a major difference in time devoted to the other two Web categories, search and commerce.

In 2003, 3 percent of time was spent on search. Now, it's 5 percent. And four years ago, people spent 16 percent of their online time buying or shopping for things, just a tad more than the 15 percent of time allotted to commerce currently.

What's this all mean? Expect the big Internet media firms, companies like Google (GOOG) and Yahoo (YHOO), as well as traditional media firms like News Corp. (NWS), which owns MySpace, Disney (DIS), which is buying popular virtual worlds site Club Penguin and my parent company Time Warner (TWX), which owns AOL, to continue focusing on the most media-rich applications on their sites, stuff like online video, photos and music.

Ad dollars are clearly migrating to the Web in large part because more users are spending a lot of time watching clips on Google's YouTube, listening to new songs on MySpace and sharing photos on Yahoo's Flickr. And this is a big reason why the Internet's big search companies, Google, Yahoo, Microsoft (MSFT) and Time Warner's AOL, are all increasing their presence in the online ad network business.

Google is buying DoubleClick. Yahoo recently purchased online exchange Right Media. Microsoft closed its deal for digital ad agency aQuantive on Monday. And AOL is buying Tacoda, a behavioral targeting firm.

One reason for the decline in time spent on communication is that content and communication have melded together thanks to the popularity of social networking, which was classified as content but often functions as communication. E-mail and IM may not be as useful in an age where MySpace and Facebook pages have become a means of communication and self-expression.

But the big question that remains for marketers is just how effective advertising on Web content can be and therefore, how lucrative for the content owners?

Companies are still trying to figure out the best way to sell ads on Internet videos and it's a particular challenge to sell ads tied to user-generated videos, which some advertisers are shunning out of fears that they could be associated with questionable content. Social networking sites also have that issue to contend with.

So content may, in fact, be king. But it is going to take some time for major Internet media companies to figure out just how much this content is worth to advertisers.