Google… one way you could profit from Youtube

By: ispeculatornew
Date posted: 03.11.2009 (4:00 am) | Write a Comment  (6 Comments)

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youtubeIn November 2006, when Google announced it was purchasing Youtube for $1.65 billions, it raised a lot of questions about how they intended to profit from this new purchase and what plans they had in mind. They cleared up from the start that they would not be changing much from the perspective of the user clearing up rumors about the possibility of adding ads before the start of other videos and other such methods often seen as “restrictive” from the viewer’s perspective. Truth be told, few raised doubts about Google’s ability to generate a cash cow from the leader in online video. As Google had done with many other of its products, we expected to see Google come up with many innovative ideas to come up with advertising dollars.

But while the game is far from over, Google has certainly not been able to live up to its shareholders expectations for Youtube as it has been defined as being about breakeven, far from its target and the from the usual return on capital that Google is used to. The good news of course is that Youtube has continued to grow in terms of users, of content and despite many issues with Copyrights, it seems to be getting better about dealing with all of these issues as time goes by which is obviously great news.

huluIn terms of competition, there is little to none. The main competition currently is from Hulu, the Super-Bowl promoted video website that has been gaining a lot of ground in recent months although it is in a very different competitive arena than Youtube. While Youtube is getting content from every possible arena and all kinds of users, Hulu is focused on professional content mostly generated by US TV networks such as FOX and NBC. The problem for Youtube is that since Hulu’s content is better controled (obviously), advertisers feel a lot safer spending money and knowing that their brands and messages will be next to high quality content while that is much more difficult to promise on Youtube.

But I still think Youtube has enormous potential and am surprised to not see more in terms of innovation coming from the Google division. Here is one idea that i think could in a matter of 3-4 years become a major revenue generator. What is the biggest online event in the world? The SuperBowl of course!! Why? Well there are many reasons and perhaps the most important is the number of viewers captured at once. But perhaps even more important is the creation of an interest in the ads. Some studies show that as much as half of the viewers are more interested in seeing the ads than the game itself. Gold you say? Obviously. The ads are not only a 30 second span to gain attention but will often be talked about and watched for days and weeks. That is worth so much for advertisers.

So back to Youtube, I think a similar concept could be applied to Youtube, in terms of generating major events that would not cost much.

Here is a breakdown:

-Youtube sets up an annual contest of 30-60 second clips with entries of 100-200 videos subject to editorial picks to start with. Then, over a month, perhaps in October/November (to capture the viewers attention before the all important Holiday season shopping), you have the competition ina similar format to that of a tennis draw or an NCAA basketball event. Every day, 8 ads could compete with the highest rated ones moving on to the next round.

-Can you imagine the amount of buzz that could be generated over one month as fans talk and discuss the better ads and vote for their favourite ones. Every day, you have 8 ads that would be viewed by tens of millions around the world.

And then when year #2 comes around, you apply the same concept but charge for entry. Pepsi, Coca Cola, Budweiser, etc would certainly be more than willing to pay 10-20K to start for such a spot/opportunity and as demand rises, so would the entry price. If the Super Bowl can generate a few millions per ad, just imagine how much this could generate for YouTube???

Any thoughts?

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6 Comments

  1. Comment by OneDay — March 11, 2009 @ 9:09 am

    Very informative post!

    Other range of idea:
    Over the years, Youtube has created a huge community. But in order to make money, would it be possible that Youtube could sell this user database as a market research tool to corporations…? Scaryy

  2. Comment by IS — March 11, 2009 @ 1:48 pm

    No doubt yes, and I will soon be writing about Twitter as many have already started doing just that with Twitter info. Why do you think it’s scary?? I think that they usually do not use infos from a specific user but rather from the entire group and therefore it does not create privacy issues in my opinion..

  3. Comment by OneDay — March 11, 2009 @ 2:47 pm

    ok you want my point of view. Before, check this interesting and controversy video about facebook, another social networking website:
    http://www.albumoftheday.com/facebook/

    With the development of technology and data circulating in a phenomenal speed, information privacy can be an issue. Valuable information like purchases, surfing habits, preferences and interests can be sold to corporations. My point is that even from the entire group, website can use infos from a specific user… technically tracking you without your consent!!

    However, I’m not saying I won’t use internet or purchase online. It’s just that we need to think before “clicking”. Sorry if I might sound paranoiac or too philosophical for this blog but I still find this scary :S hehehe

  4. Comment by IS — March 11, 2009 @ 5:10 pm

    Very true… not saying that I agree 100%, but I see your point and can imagine it causing a problem. And indeed, I think the main thing is that before posting any picture, any comment, anywhere, we have to be careful.

    Thanks for your input Oneday, very appreciated.

  5. […] that Youtube certainly could generate a lot more money around the idea if it were one day able to create a similar type of event. There have been encouraging signs this year as Youtube has been more agressive in getting ad […]

  6. Comment by Antwan Ruch — March 25, 2010 @ 8:00 am

    I love youtube but it does have some bad points. Like with illegal material and things.

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