Monday, July 14, 2008

Does Google have a problem with YouTube?

It's being reported YouTube is proving a slight thorn in the side of the search power, with estimates predicting the $200m USD in global revenue for the site for this year will be below expectations.

The WSJ covers it here -

It's interesting that this is proving a problem. It's good that Google's ad head honcho is digging around finding problems with the process that need to be solved.

Memo to local Google - the main problem is that you impose an above market minimum ad spend for brands to be on the site which is based on flawed logic. If you want a reason the local ad migration to YouTube is relatively slow - this is it.

In 06 when the GOOG acquired YouTube I think the industry let out a collective sigh of relief that the troublesome area of video content would be nailed by the company that could do no wrong. Trouble is, the billion dollar question of how to nail the 30 second spot for the online video environment hasn't been answered.

YouTube faces issues many of its local competitors doesn't. One is advertisers have a reluctance to appear on the site due to the amateur nature of the content. Many entertainment advertisers don't feel they need to advertise as their content is going great guns without any help. Some refuse as they're in the middle of legal action. Whilst YouTube makes up about 60+% of all video streams in AU, there's less resistance to ad placements on ninemsn or News as advertisers are more comfortable with editorial.

Personally I rate the channel and want to explore it more. I like the fact it's ad hoc and sometimes raw ... that's what makes it appealing and engaging. And the numbers don't lie - YouTube is still enjoying phenomenal growth and engagement - it is incredibly efficient at giving order to millions upon millions of videos and making them accessible. Trouble is - Google put obstacles in front of advertisers when they want to trial the medium.

Tim Armstrong: "The next five years of the Internet is about execution."

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