Mele’s Musings

Google Push to Sell Ads On YouTube Hits Snags

Poor Google.  It can’t monetize YouTube.  Will this be its albatross?

Picture: digitalsurgery.net

Article excerpt:  Wringing ad revenue from YouTube is proving to be a challenge for Google Inc. Although users of the popular video-sharing site view clips more than one billion times on most days, the site hasn’t been as popular with big corporate advertisers. World-wide revenue from YouTube ads has fallen short of Google’s expectations this year, and is likely to total about $200 million for the full year, according to two people familiar with the matter. YouTube is critical to Google’s campaign to extend its advertising reach far beyond text ads tied to Web searches, its revenue powerhouse. Google wants to sell more video ads and display ads on YouTube and elsewhere. It also wants to crack the television, radio and newspaper ad markets. Its target: the 90% of global ad dollars that don’t currently flow to the Internet. “Most advertisers are still testing the waters on YouTube,” says Sean Muzzy, media director at Neo@Ogilvy, a digital ad agency owned by WPP Group’s Ogilvy & Mather. Some big advertisers, he says, haven’t been comfortable that their ads might appear next to amateur videos. Google Chief Executive Officer Eric Schmidt has acknowledged that the company hasn’t yet found the best formats for video advertising.
The rest: online.wsj.com

Musing:  It’s a fascinating dilemma, and one wonders if Google is the right company to tackle it.  Google wants to leverage the huge traffic at YouTube to extend its network, potentially bringing more targeted advertising (or at least auction-based advertising) to its customers.  But is the concept based on a few fatal flaws?  First, Google built its value on advertising targeted precisely, with tremendous control over what inventory the customers were buying.  YouTube offers very little of that.  The inventory produced by YouTube is generally user generated, and is, by its nature, not user controlled.  Second, Google wants to connect search usage to content in other areas.  But just how connected is a search on Google going to be to a search on YouTube?  My guess is highly unconnected.  The sites are used for very different purposes, and connecting searches on one to the other may end up bearing little fruit. Third, the whole user-generated content industry (MySpace, YouTube, Facebook, Flickr) is struggling with how to monetize their vast audiences.  The only answer most can come up with is either branded pages – which most advertisers simply use to make ads (hardly a reason to friend a brand!) – or run-of-site untargeted ads.  Is the answer pre-roll and post-roll on YouTube video? Yeah, if you want to kill YouTube.  Consumers hate those things, and will especially hate it on a site that is supposed to be open.  Google is giving itself 5-10 years to figure this out.  In internet time, that is an eternity.  5 years ago, Google was a bit player, 10 years ago (1998), most people hardly even knew what the web was.