Google can't control its wild child
Posted
Jul 11 2008, 04:05 PM
by
Kim Peterson
Rating:
New Line Cinema wanted to promote the movie "Hairspray" on YouTube last summer, according to the WSJ, but it couldn't find enough videos where it wanted to put its advertising. Think about that for a minute. People watch more than 1 billion videos on YouTube every day. The YouTube audience -- mostly the 35-64 age group, believe it or not -- has money to spend and is a perfect group for "Hairspray" ads.
So how is it that out of a billion videos, New Line couldn't find enough for its ads? Blame Google, which is utterly and completely in over its head on YouTube. The company's only going to bring in about $200 million in ad revenue from YouTube, a paltry amount given the site's popularity and ad-serving potential. Google bought YouTube in 2006 for $1.65 billion.
There are several problems colliding here. YouTube is total chaos, content-wise, with users violating copyrights all the time. You don't have to search long to find rampant copyright abuse taking place, even though Google has been sued for copyright infringement in the past. Advertisers won't go anywhere near videos that might be illegally distributed.
Perhaps a bigger problem is that tying ads to popular user-generated video is a hard thing to do. Yesterday, the most-viewed clip on YouTube was "Drunk Referee." Today, that clip is old news, having slipped off the most-viewed page into the YouTube ether. Videos go up and down in popularity all the time, and Google's ad team would have to move incredibly fast to tie ads to hot videos and get them approved.
The biggest problem is Google's clumsy handling of YouTube's advertising business. Google made some advertisers sign three separate legal contracts, according to the WSJ. One person -- a temp worker in California -- was given sole authority to approve special ad deals, which created a bottleneck. And some advertising bills had to be calculated by hand.
You'd think that with all that search advertising expertise, Google would have had a better handle on video ads. In Google's defense, the company has begun cleaning up YouTube's ad problems in an initiative code-named "Project Spaghetti."
But that doesn't fix the bigger issue of how Google can make money off of its wild child. Mark Cuban suggests that Google employees manually review every video clip for copyright violations. Sure, it would cost more, he said, but YouTube could recoup those costs by selling more advertising.
Google needs to recognize that YouTube can't be the ultimate destination for all video. The user-generated clips are too unpredictable (and too boring, frankly) to make money from, and should be sent to the back of the bus. The videos of baby's first birthday and Fido skateboarding will find their own small audience of viewers.
Google should spend its time and energy promoting -- and selling ads for -- videos from legitimate partners. Put those videos out front, and make the home page more user-friendly and appealing (see Hulu.com for design tips).
YouTube is at a crossroads, and needs to decide what kind of video site it wants to be. It can't do it all.
Related reading:
Citi: YouTube has revenue potential of $491 million
Schmidt promises new YouTube monetization tools
YouTubers to get ad money share
How YouTube can fix their revenue problem
