YouTube Looks Beyond Advertising Revenues
- Posted: Tuesday, October 14, 2008
- |
- Author: pradhana
- |
- Filed under: Business Analysis
By Eden Zoller, principal analyst at Ovum
Google-owned YouTube is tapping into e-commerce revenues with the launch of a new service in the US that allows YouTube viewers to buy music and games from selected partners featured on YouTube videos. This is a good move as Google has struggled to monetise YouTube despite experiments with a range of advertising models.
YouTube is the dominant player for online video and is a hugely popular user-generated content site enhanced with social networking features. It had 330 million visitors in August 2008, according to Comscore. The problem is that while YouTube continues to show strong growth in usage and users, it is struggling to find a strong, underpinning business model to match. And this is a big problem when you consider that Google spent $1.65 billion to acquire YouTube (2006) and has been investing in it ever since.
Google does not provide financials for YouTube but it is not yet profitable and its contribution to Google’s revenues is minimal – Google’s second-quarter 2008 revenues stood at $5.37 billion; YouTube revenues are estimated to come in at around $100 million for full-year 2008.
Complementary, mixed models are the way forward
Google has taken pains to find advertising formats that sit comfortably on YouTube, and to be fair this is particularly challenging in the context of user-generated video content. Social networks are attractive to advertisers because of the opportunities for deeper targeting and interactivity, but embedding advertising in a way that sits comfortably with users and does not backfire on brands is very difficult.
Advertising revenues in this context are not the sure thing that many in the industry have presumed. It seems that Google agrees and recognises the need to look more seriously at diversifying revenues beyond advertising. It has chosen an e-commerce platform to do this. This makes sense as e-commerce is a natural complement to online advertising and ideally a ‘click to buy’ is what the advertising should encourage.
We think Google has made the right move and we have advocated mixed revenue streams for social networks as a means to strengthen the business model. This is the approach adopted by LinkedIn, one of the few social networks that has managed to break even. Advertising will be the mainstay, but smart companies will look at a more diversified model.
The call of ‘click to buy’
The YouTube e-commerce platform is based on a simple concept, which in our book is always a good thing. YouTube viewers who want to buy, for example, a song featured in a music video can click on an icon that takes them to selected commerce partners including Amazon.com and Apple’s iTunes store. YouTube gets a share of the revenues from every transaction.
The current content partner line-up is modest in terms of numbers if not names, and comprises content from EMI and Universal Music Group, and EA’s Spore video game. Google is of course hoping to bring other content partners on board going forward and also diversify the content and services on offer. Another attractive aspect to the proposition is that YouTube is creating an environment where viewers pay for third-party content rather than pirate it and infringe copyrights.
The search for advertising models continues
Google is meanwhile still experimenting with different approaches to video advertising and has acknowledged this will take time to get right. It has tried pre- and post-roll ads, which typically have limited success because viewers are annoyed by having to sit through the first ads and then typically skip the post-roll video ads.
Another format being tried on YouTube is in-video advertising, which basically means running ads along the bottom of videos as they play. The danger here is that ads appear annoying and intrude on the viewing experience. A more recent and interesting initiative is Google’s video ID system, which enables content owners to know when copies of their video clips are uploaded to YouTube by users.
The idea is that content owners can then share in any revenues generated around that copied clip. Google’s approach might look scatter gun but it has to find a formula that works. YouTube is more than a test bed – it is the lion’s share of Google’s online video business. /PR
Search-
Google Reader-
Blogging For Business-
Internet Business-
Recommended Links-
E-Commerce Optimization-
FastPitch, NiceOffers-
Sponsor Ad-
Blog Feeds-
You Are The Visitor No:-
Categories-
- 3G dan 4G (23)
- 3G Femtocell (8)
- Ad Spending (53)
- Ad Trends (6)
- Advertising (58)
- Advertising Metrics (3)
- Apple (28)
- Assets Management (2)
- Biometric Passport (1)
- BlackBerry (11)
- Blogging (9)
- Bluetooth (8)
- Brand and Branding (8)
- Broadband (45)
- Business Analysis (100)
- China (20)
- China Mobile (1)
- Commercial Telematics (1)
- Consumer Spending (1)
- Content Business (3)
- Cybercriminal (1)
- Data Security (2)
- Digital Content (106)
- Digital Home (2)
- e-Commerce (25)
- Enterprise 2.0 (1)
- Facebook (13)
- Friendster (1)
- Gadget (11)
- Global Ads Alliance (3)
- Going Green (1)
- Google (39)
- Google Ad Planner (2)
- Google Adwords (1)
- Google Android (10)
- Google Chrome (3)
- GPS (1)
- Handsets (13)
- Home Theater (1)
- HSDPA (2)
- HTC (2)
- Huawei (1)
- In-Game Ads. (1)
- India (10)
- Instant Messaging (3)
- Internet (26)
- Internet Advertising (139)
- Internet Explorer (1)
- Internet Users (30)
- iPad (1)
- iPhone (28)
- iPhone 3G (1)
- iPhone Advertising (5)
- iPod (5)
- IPTV (18)
- IT Business (3)
- IT Security (2)
- iTunes (4)
- Linux (5)
- Market Survey (306)
- Marketing (42)
- Media Market (7)
- Merger-Acquisition (29)
- Microsoft (21)
- Miscellaneous (76)
- Mobile Ads Revenue (10)
- Mobile Advertisers (2)
- Mobile Advertising (94)
- Mobile Applications (3)
- Mobile Broadband (4)
- Mobile Browser (1)
- Mobile Browsing (1)
- Mobile Business (7)
- Mobile Consumers (2)
- Mobile Content (90)
- Mobile Data (3)
- Mobile Data Revenue (2)
- Mobile Digital Media (5)
- Mobile Entertainment (1)
- Mobile Gaming (5)
- Mobile Market (20)
- Mobile Marketing (3)
- Mobile Messaging (1)
- Mobile Payments (2)
- Mobile Services (119)
- Mobile Shopping (1)
- Mobile Social Network (23)
- Mobile Technologies (1)
- Mobile TV (28)
- Mobile Video (14)
- Mobile Video Ads (2)
- Mobile Video Market (11)
- Mobile Widgets (5)
- Mobile-PRIZM (1)
- Motorola (10)
- MySpace (28)
- Netbook (1)
- New Format (2)
- New Trends (1)
- Nokia (28)
- Online Advertising (95)
- Online Banking (1)
- Online Business (8)
- Online buyers (1)
- Online Gaming (9)
- Online Services (176)
- Online Shopping (4)
- Online Spending (4)
- Online Travel (1)
- Online TV (3)
- Online Video (23)
- Online Video Ads. (16)
- Opera (3)
- PayPal (2)
- Phishing (2)
- PNDs (4)
- Podcasting (8)
- Premier Ultimate (1)
- Qualcomm (4)
- RFID (4)
- Samsung (2)
- Skymarket (1)
- Smartphone (12)
- SMS-based Advertising (1)
- Social Media (3)
- Social Network (39)
- Social Network Marketing (2)
- Sony Ericsson (5)
- Target and Segmentation (2)
- Texting (3)
- Ultra Wideband (5)
- User-Generated Content (2)
- Verizon Wireless (2)
- Video Game (1)
- Video on Demand (5)
- Video Surveillance (2)
- VoIP (15)
- Web 2.0 (9)
- Web Marketing (1)
- White Space (19)
- Wi-Fi (16)
- WiMAX (11)
- Windows Mobile (3)
- Wireless Market (7)
- Wireless Services (45)
- Yahoo (31)
- You Tube (24)
Blog Archive-
Lemon Twist Blogger Template is an extremely beautiful blogger template created by JackBook.Com based on Lemon Twist Wordpress themes by farfromfearless.com. Thanks to Chris Murphy and Jacky Supit for this great template.
- Copyright © 2008-2011 ICT & Internet Business. All Rights Reserved. Powered by Blogger
- Back To Top
- Log in
- Blogger
- Home
Recent Comments-