Kevin Rose’s podcast network powerhouse Revision3 announced their financial returns for 2008, and they paint a rosey picture for online video. It also helps fill in a little bit of the gaps I and the rest of us were left wondering about following the cancellation of several shows on the network earlier in October.

The revenue for the network as a whole was reported to have tripled in 2008, though the press release doesn’t have any hard numbers as to what the total dollar amount was. Oddly, and unlike most media networks, rather than talking specifically about viewership and download numbers, Rev3 highlighed the amount of watching going on by quantifying it in minutes of “viewer engagement.” 

It’s definitely a term that’s being used to obfuscate the amount of actual viewership taking place.  Given how they seem to sell their ads (pre-rolls, post-rolls, host-read ads and certain affiliate relationships), it might be a more telling and insightful number to report exactly how many episodes viewed there were, rather than saying simply that they had achieved 140 million minutes of engagement monthly.

“Despite today’s tumultuous economic climate, Revision3 is making huge strides, dramatically increasing both viewership and revenue,” said CEO Jim Louderback in a statement today. “Like everyone else, we’re being cautious in how we approach 2009, but we anticipate continued growth over the coming months.”

They highlighted quite a few of their 60 advertising partners, including the Air Force, EA, Sony, Anheuser-Busch, Dolby, Virgin America, Go Daddy, Zune, Dr. Pepper, Carmex, Adobe, Microsoft and Axe.

The ones that are most prevalently advertising on the network these days are GoDaddy, Netflix, Michelob and Becks beer, GoToMeeting, and GoToMyPC, as we mentioned last month. Most of these seem to be affiliate style relationships, which definitely leaves the network with a lot of head room to grow.

2009 will see the online video market’s battle of the business models.

Revision3 is definitely one of the horses I’ve been watching run the video network race since their start in the business, and I’ve always had an affinity to its founders and many of their on-air talent. They’ve done a good job of pulling together a combination of recognizable faces, interesting genres and engaging shows. Because they’ve approached the business as creatives focused on video rather than aggregators with a broad-stroke approach (like Wizzard Media), they’ve an uphill battle on two fronts.

The first difficult front is that of content and audience monetization. Their application of commercialization has been uneven so far, though it seems to have markedly improved since the hire of Jim Louderback as CEO. Since the majority of the team is so focused on the creative side rather than the monetization side, this is to be expected, to a certain extent.

The other side of the business that’s an uphill battle for Rev3 has been the high cost of doing business as compared to a lot of the other players in their business.  Aggregators like Wizzard don’t have to front the costs of production, only that of distribution. That’s why they’re able to sustain their business off the same type of advertisments that Rev3 may have a hard time breaking even with.

This isn’t to say that Wizzard has a superior business model.  I think that if you talk to the business side over at Wizzard, they’ll readily admit that on average, the shows being produced at Revision3 are superior to what they host - that’s to be expected. Wizzard hosts tens of thousands of producers, whereas Revision3 hosts tens of producers.

That’s why Revision3 has made moves to crowdsource some of their production, but at it’s heart Rev3 is still a production house (not an aggregator). During the tough economic times we’re now facing for the forseeable future, it’s going to be a battle of the business models to see which one is boud for success.

—Related Articles at Mashable | All That’s New on the Web:Revision3 Expands Partnership with Blip.tv for Content DistributionLayoffs Hit Revision3Revision3 Branded Miro Player, Now Available for DownloadWine Library TV Moving to Revision3Revision3 Signs Transpera to Power Mobile VideoThe Digg Reel - Best of Digg VideosRevision3 Revisions. New Design Revealed Today.

Google’s advertisers mostly don’t know what they’re doing and, if they did, Google could lose as much as $2.1 billion in revenue, according to Jon Morris, founder of search engine marketing (SEM) company Internet Marketing Initiative. Online advertisers can spend 30% less and still get the same results if they work with a capable SEM firm, Morris said. By Morris’ estimate, only about 30% of Internet advertisers understand the intricacies of adverting analytics or are working with an SEM company. That leaves 70% wasting money.

Google says it supports more efficient advertising and insists that inefficient advertising is self-correcting. "Google provides free tools for measuring ROI and constantly educates advertisers on the value of tracking ROI," a company spokesperson explained via e-mail. "The adoption of our tools is high and customers frequently manage their bids. If advertisers are bidding inefficiently, the behavior will not be sustainable for the advertiser. Ultimately, we believe advertisers are spending in ways that deliver strong ROI and value to their business."

Morris’ assertion isn’t exactly shocking coming from someone with a vested interest in an SEM company. But it’s provocative speculation. If 70% of Google’s advertisers could do just as well spending 30% less, that would reduce Google’s $10 billion-plus annual revenue by $2.1 billion. Such sudden spending efficiency, however, is no more likely to happen than, say, 70% of the world’s Tylenol users switching to generic acetaminophen, however sensible that might be from a cost perspective.

"In general, there are a lot of firms that are generating traffic, they’re happy with the leads they get, but they’re not really taking a sophisticated approach," says Morris. "In many cases, they’re paying too high of a click-through-rate or they’re not figuring out ways to optimize their landing pages to really maximize their conversion rate."

For example, in a situation where a company is paying $1 for one visitor and 30 cents for another, the temptation is to see the less expensive lead as more valuable. "It turns out that that $1 [visitor] might have a 40% conversion rate, compared to a 0.5% conversion rate for the 30 cent lead," said Morris in an interview. "Just by having a good data analytics system, you can make much more intelligent decisions about how you allocate your dollars to maximize your return on investment."

Morris says one of his company’s clients, America Direct, a life insurance provider owned by Fidelity Life Association, has reduced its cost per lead from $150 dollars to less than $20 per lead since a year ago. Typically, he says, clients can reduce their cost per lead from 30% to 50%. A different advertising model, such as the pay-per-action system Google began beta testing a few days ago, might accomplish the same thing.