Magnify to Run Pre-Roll in Embedded User Generated Content (UGC)

Written by: Eric Steckel
eric@bars-tone.com

Ever since YouTube roared onto the scene, there has been a conundrum about how to make user generated content (UGC) profitable. “So far, there has been a real disconnect,” says Brent Roberts of Specific Media, a premium online ad network. “One of the major issues with running ads before user generated content, and creating a profit driver, is that a potential advertiser has no way of knowing where that video might be embedded.” In other words, it could be embedded in a respected third-party site that hits your target demographic, or it could end up somewhere else, which is far less desirable. The advertiser has little control over where a YouTube, Metacafe or Vimeo upload is embedded.

Enter Magnify, an aggregator that makes it easier for mid-sized web publishers to integrate video into their sites. Magnify helps to seamlessly embed user generated content, content that the property has found, or content that the property has created, in order to leverage the power of video within the site. With Elastic Inventory, Magnify has brokered deals to run pre-roll in embedded UGC. The way it works is that the publisher can buy UGC pre-roll space at a reduced rate, and then sell it at a premium cost. The publisher profits from the mark-up. Currently they have brokered a deal with Metacafe, but the goal is to do this across all of the UGC sites.

What is interesting about this is that it truly blurs the line between UGC and Professional content. Because the sites that they are purchasing ad space from have been hand selected and vetted, it is assumed to be a safe bet. However, Roberts suggests that the real litmus test will be when a large company like Clorox or Williams Sonoma enters into the mix. “If a company of that size places a considerable buy, you now have the scalability you need to be profitable.”

Don’t expect this to be an overnight sea change. As Erick Schonfeld of Tech Crunch points out, “I doubt YouTube would ever agree to an arrangement where they lose control of the market for their video ads.” Since YouTube is still the biggest, baddest player in the field, that’s an extremely important point, which means the promise of YouTube profitability is still out there. Magnify might take a small cut of the action, but time will tell if, when and how UGC will be truly open to advertisers.