GooTube? Yoogle? Whatever You Call It, It’s Big

Posted on by Chief Marketer Staff

(Searchline) No, the name won’t undergo any morphing, but the online video space seems to have changed almost overnight with the announcement late Monday that Google will buy video sharing site YouTube for $1.65 billion in stock.

And with the deal slated to be completed by the end of this year, everyone now seems to be wondering how much these two Web giants—one a long-established master of its search domain, the other only 18 months old but already dominant in consumer-generated video—will start to look like one another. Will YouTube video offerings start showing up blended into Google’s natural search results? And will Google be able to unlock the revenue stream for YouTube?

Google CEO Eric Schmidt was emphatic that buying the video start-up fits perfectly with Google’s prime directive. “The YouTube team has built an exciting and powerful media platform that complements Google’s mission to organize the world’s information and make it universally accessible and useful,” he said in a statement. “Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”

“Our company has played a vital role in changing the way that people consumer media, creating a new clip culture,” YouTube CEO/cofounder Chard Hurley said. “By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners.”

The value of the deal underlines the growing importance of social networks and user communities on the Web; Google is paying about three times the $580 million News Corp. agreed to pay for social network site MySpace in July 2005.

The deals are different in an important respect: While MySpace aims to link members to one another by letting users post their own content, YouTube works by making it easy both to post video and to find, rate and share existing clips.

Google might be able to apply its search technology to making video search more thorough or efficient. In a teleconference after the announcement, Schmidt said Google engineers had identified some ways they could make YouTube more easily searchable. “We don’t lack for a set of ideas,” he said. “Most people believe this is just the beginning of an Internet video revolution. And there will be many ways in which that video gets uploaded, monetized, and copyrights respected.”

The purchase should also complement Google’s own video channel, which has struggled to amass an audience as big as YouTube’s. In July, comScore rated YouTube third in traffic among Internet video sites, following Yahoo! and MySpace. Google Video was ranked fifth. Shortly after that, Google added a link to its video site to the Google Search home page.

“Google made a huge leap with this one,” says Rob Murray, president of search marketing firm iProspect. “This moves them from a second-tier product into the leadership position in online video. I think they looked at the success of YouTube and the future strategic importance of video and decided they couldn’t afford to be a fifth- or sixth-place player.” With 100 million views a day and growing on YouTube, even a slow, careful migration to an ad-based model could produce strong revenue for an owner like Google, he says.

Finding a workable ad model has preoccupied YouTube lately; it’s a tricky problem for a community that’s so strongly user-driven. As a Web company that had to contend with its own user resistance to ads way back when, Google might be able to help with that problem.

What form any advertising will take is very much up in the air; both text ads and display ads may play a large part in monetizing YouTube. But of course, if ever an audience was well suited to video advertising, it’s YouTube’s. The question then becomes what form those ads might take. In tests, both Google and YouTube have shied away from showing “pre-roll” video ads—short ad clips that appear before running the video chosen by the user—saying that they tend to mar the user experience. Google has experimented with showing click-to-play video ads on its Ad Sense publisher network. YouTube also has plans to test permissioned video ads that users can choose to play and to which they can then add ratings and comments. The site has sold video ads on a cost-per-thousand impression basis to Warner Bros. Records and Fox Broadcasting.

“Both YouTube and Google are very smart when it comes to the user experience,” says Kevin Sladek, cofounder/chief operating officer of video serving platform VideoEgg. “They’ve done a lot of things right, so it doesn’t surprise me at all that they might be looking at those [permission-based options] as well.”

Advertisers have shown them selves skittish about being associated with some of the quirky consumer-generated content that has proven most popular on the site. Nevertheless, in September marketing research firm eMarketer predicted that advertisers will spend $650 million on Web video advertising, revising its estimate for that activity upward precisely because of the “media frenzy” created by the popularity of sites like YouTube.

“Especially in the years 2008 and beyond, the deal will bring to the table a lot more video ad inventory,” says eMarketer senior analyst David Hallerman. “Mainstream marketers who want to do more advertising online have been looking for that. While Google and YouTube might have to step carefully as they add advertising on the site, on the whole this is a really positive deal for Google, and for marketers.”

There may also be copyright troubles in the works, for YouTube and many other video Web sites. YouTube doesn’t own the copyright for its content, and at least some of its “cool factor” has derived from the fact that users can find clips pirated from TV and movie material that may not have been properly permissioned by the creators.

Copyright concerns led Internet entrepreneur Mark Cuban to tell a group of advertisers in late September that only a “moron” would purchase YouTube. “They are just breaking the law,” he said at the time. “The only reason [YouTube] hasn’t been sued yet is that there is nobody with big money to sue.”

But back in June, YouTube announced a deal with CBS that will test a new advanced content identification architecture for the site. The system will allow CBS to locate copyrighted CBS material on YouTube and choose either to have it removed or to share in any advertising revenue placed against the content. And on the day of the Google deal, YouTube announced similar pacts with Sony Corp. and with Universal Music Group, which earlier this month accused both MySpace and YouTube of copyright infringements to the tune of “tens of millions of dollars.”

Google had its own pair of copyright deals to trumpet on Monday, with Sony and with Warner Music Group. Taken all together, these may act to give content owners enough confidence that their rights will be guarded going forward. That might take the shine off Google as a new and very deep-pocketed owner of a company that has not always been kind to copyright.

Overall, says Hallerman, the size and prominence of the Google-YouTube deal may set more marketers to thinking about the online video strategy they may need in coming years. “It will focus their attention more while creating more space for them to advertise in,” he says. “It’s an incremental step, but a very big increment.”

GooTube? Yoogle? Whatever You Call It, It’s Big

Posted on by Chief Marketer Staff

No, the name won

More

Related Posts

Chief Marketer Videos

by Chief Marketer Staff

In our latest Marketers on Fire LinkedIn Live, Anywhere Real Estate CMO Esther-Mireya Tejeda discusses consumer targeting strategies, the evolution of the CMO role and advice for aspiring C-suite marketers.

	
        

Call for entries now open

Pro
Awards 2023

Click here to view the 2023 Winners
	
        

2023 LIST ANNOUNCED

CM 200

 

Click here to view the 2023 winners!