Rob Spiro is the co-founder of The Mechanical Zoo, an innovator in the field of social search. In 2005, Rob co-founded the video blog network Reel Blogs, Inc.

Viewership is enormous for online video — billions of YouTube videos are watched every month, which is an outrageously large number that totally dwarfs television — but revenue hasn’t yet arrived.  The best estimates are that Youtube made $100 million in 2008, which is a drop in the bucket of Google’s coffers and the broader industry.

Monetizing the *channels* of online video isn’t yet working.  That being said, everyone is convinced that online video will become a huge industry that generates billions of dollars.  (And by “everyone”, I mean the population of the San Francisco Bay Area.)

Aside from the sale of physical goods, there are three things that make money for consumer-facing Internet businesses, broadly speaking:

1. Video is already an essential part of one of them (the foundational industry of the internet).

2. Second is display advertising, and this is where most people think “online video ads” will come into play.  A short video is a great alternative to a banner ad or a Flash game, or so the thinking goes.  But the age of online video ads still exists in the hypothetical realm of forecasts for 2010.

3. The third money-making operation on the Internet is Search, and this is the one that really matters, because it’s growing the fastest.  Professional Forecasters, Pundits, and Entrepreneurs rarely think about Search as a source for online video revenue, but allow me to make the case…

Consider the following recent data points that I think are indicative of a larger trend:

- In December, Marissa Mayer (the head of Search at Google) gave an interview in which she said that 25% of Google Search results pages include some form of “media” — which is basically anything other than a webpage, including Video, Images, News, Maps, Blog posts, etc.

And she explicitly says that Google’s goal is to *increase* that percentage significantly.  She also says that speech recognition technology is nearing a breakthrough, which will allow online video clips to be automatically transcribed and indexed for search.

So you can be sure that in the next 5 years, online video will make up a much larger percentage of search results on Google.

(Shameless self-promotion: check out 20:30 in the interview, where Mayer and Michael Arrington talk about my startup, The Mechanical Zoo.)

- In December it was announced that Youtube is the second largest search engine in the world, behind Google.  In my own observation I’ve seen teenagers using Youtube as their primary search engine.

Online search is a massive industry because it’s a firehose of commercial intent.  Billions of people express their intent to spend money in the form of keywords, and advertisers are given a chance to speak to those people at their moment of need.  In the future, when people express commercial intent in a search engine, they’ll want to see a video as the next step in satisfying that need (to research a purchase, plan travel, find local services, etc.)

Thus “Video SEO” (Search Engine Optimization) will become a huge industry.  A business that wants to tap into the firehose of Search traffic will want their *video* to show up on the first page of Google or Youtube search results.  Imagine that when you type in “Optometrists 94114″, the optometry practice with a well-produced video on Youtube that’s been optimized for search is going to appear on the front page of the search results — and as a result, they’ll get hundreds more customers.  The tens of billions of dollars spent on today’s SEO will increasingly go towards video production and optimization.

How can you optimize a video for search?  I would imagine that techniques will evolve in the coming months and years. Viewcount will almost certainly be a contributing factor in Video SEO, so being able to make a video that “goes viral” will pay dividends down the road for advertisers and producers.

WallStrip figured it out early — they started an online video business around Stock Market analysis, which allowed them to index each of their videos by stock ticker (an easily index-able symbol).  As a result, Wallstrip videos showed up in search results and Google Finance pages, contributing to their success (they sold to CBS for $5 a few months after launching.)

As speech recognition gets better, having a video with clearly articulated keywords will probably help search indexing.  And traditional SEO tactics, like inbound links, will certainly still make a difference.

Firms like Portal-A are extremely exciting to me because they’re positioned to be a part of the Video Search economy.

This entry was posted on Friday, February 27th, 2009 at 10:52 am and is filed under Master Class. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.