How is Google generating revenue on YouTube?
Posted by Annplugged on January 26, 2007
Marissa Mayer’s answer is ‘we don’t know, we are still experimenting.’ (Digital, Life, Design conference, Munich: DLD07)
On Jan 25 2006 the first step towards actually integrating YouTube into Google’s products was taken: if you make a search query on Google Video, you’ll see loads of YouTube shots.
Liz Gannes on NewTeeVee is asking why is it worth running two video sites? (“why take a sidetrip to a search engine when you’ll end up on YouTube anyway?”)
In my opinion, that’s why:
As for running two sites (one for YouTube and one for Google video search): I think it is totally reasonable and profitable.
- Reason 1: they have different profiles, roles, images as defined by Google (as Salar Kamangar put it, one for content the other for search – the options in AdWords)
- Reason 2: with two brands you have more scope for experimenting
- Reason 3: the combination of the above two
From the user’s point of view:
On YouTube you accidentally ‘stumble upon’ and interact
On Google video search you purposefully search and spend no time on socializing
From the media point of view:
YouTube functions as a content site of Google’s content network with a distinct community and with more scope for applying, testing various ad formats. And these tests, mind you, will be less affecting Google brand, as YouTube is separate. So video shots interrupted by an ad on YouTube will not clash with Google’s aim to ‘enhance user experience,’ because it is not Google. Being intrusive on YouTube while ‘finding out how to reduce being intrusive to the minimum’ works on the YouTube brand better and safer.
How they are carrying out video ads is absolutely an exciting question. When Marissa Mayer was asked about it at Digital Life Design conference (DLD07) in Munich, she said they are experimenting and gathering data, feedback, etc. on what works best. See: http://videos.dld-conference.com/ (day: Jan 23, The Billion Dollar Bubble). “There are lots of different business models… Maybe it means the user needs pay directly for the service, maybe it means advertisers will pay more…advertisers are good at valuing those eyeballs.” i.e. Advertisers will say how much it is worth them (even bidding?)
It is baffling though why haven’t they improved the searches (awful results pages, no need to describe them). Also, why haven’t they tried to experiment with dividing YouTube into two main columns as they do on Google search results pages: one column for organic video search and one for sponsored videos with bid management – based on similar principles to search algorithm.
But maybe this division is coming on Google video search – which, as a separate site, is of course worth being kept, if it works as an aggregator, and it will work as an aggregator indexing all sources they can/ are allowed to – with no social networking features, focusing on search, and potentially, with a differentiated method of generating ad revenue. One thing is sure, however, based on Google’s policy, I think it is out of question that Google could afford to be a biased video search engine – users’ trust is their biggest asset (besides lava lamps). So there is no way that they could push YouTube videos ahead of videos hosted on other sites.