Today Google took another stab at monetizing YouTube. Website owners can now place selected YouTube video content on their site and share a portion of the advertising revenue from accompanying Adsense units. Om Malik points out several challenges and limitations of this offering and I agree with him.
The best idea that I have seen for monetizing YouTube was from Peter Cashmere of Mashable. He wrote about the idea nearly 6 months ago when Google first started testing some monetization strategies for YouTube.
Basically the idea is to include sponsored videos in YouTube's related videos sections. For videos watched on YouTube, the sponsored videos would be shown in the Related Section. For embedded YouTube videos watched on other websites, the sponsored videos could be shown after the video has been completed at the bottom of the screen.
This is basically an implementation of Google's Adsense model for videos. It is the same model that is responsible for the bulk of Google's revenue. Why re-invent the wheel?
Here's why this model would work:
1.) It does not degrade the user's experience. Pre-roll makes them wait to watch their video. Overlay ads, block a portion of the video. By showing sponsored results in the related video section beside or after the current video, the user's viewing experience remains undisturbed.
2.) Users are shown ads when they are most receptive. Adsense works so well because it helps fulfill the users intent. When searching or viewing content, Adsense provides a supplemental set of well targeted sponsored results. Particularly for search, these sponsored results might be exactly what the user is looking for. In a similar light, after a user finishes watching a video on YouTube, his next impulse is to watch another similar video. Targeted sponsored videos are there to fulfill the need.
3.) Just like Adsense, this type of system would match the user's intent to a specific action. The user would have to click to view a sponsored video. Pre-roll, post-roll, and overlays are passively viewed and easily ignored. Clicking to view a video shows a specific interest, which is much more valuable. Instead of paying half a cent per view, advertisers might pay dollars per click through competitive bidding.
4.) Advertisers have the ability to gauge responsiveness to their ads. They would have metrics available for impressions, clicks, and conversions.
5.) Finally and most importantly, since the ad is not part of the video, Google sidesteps the sticky issue of showing ads on copyright infringing content. Google's ad efforts have been focused on monetizing the small slice of content from their approved providers presumably for this reason. With an Adsense implementation for video, Google could monetize all videos on YouTube, as well as all YouTube videos embedded on other websites around the internet.
Google: There are bigger opportunities for monetization. Don't turn YouTube into a Skype.
Tuesday, October 9, 2007
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