Friday, September 3, 2010

YouTube gets mature

If nobody did notice but YouTube is doing a lot more advertising on their website. The most obvious is the above the fold 960x250px ad on the landing page, which is ad served by doubleClick which got acquired from Google in 2008 for $1 billion.
Further more there are some banner ads on the right side of the page.

But the most interesting advertising approach is a perfect approach.
Whenever somebody is uploading a video which has copyright content, YouTube will ask the copyright owner if they should take the video down or instead leave it on. If the video stays on, YouTube will serve ads on the video (pre roll, post roll and localized banner ads)

The content and copyright owner will get a revenue share from google. This is a great idea, instead of deleting unwanted content YouTube will use it to make money. It is like making your enemy to your friend and make money out of it.

The strategic head behind is Salar Kamangar, YouTube’s co-head, who also co-founded Google’s AdWords search advertising program.

Remarkably, more than one-third of the two billion views of YouTube videos with ads each week are like TomR35’s “Mad Men” clip (see image below) — uploaded without the copyright owner’s permission but left up by the owner’s choice. They are automatically recognized by YouTube, using a system called Content ID that scans videos and compares them to material provided by copyright owners.

Those two billion views, a 50 percent increase over last year, according to the company, are just 14 percent of the videos viewed each week on the Google-owned site. But that’s enough to turn YouTube profitable this year, analysts say.

“YouTube is a big component of our display revenue, and display is our next big business,” Eric E. Schmidt, Google’s chief executive, said in an interview.

In the last year, the video site has become a significant contributor to the family business at a time when Google, which makes more than 90 percent of its revenue from text search ads, is seeking a second act. Though Google does not report YouTube’s earnings, it has hinted that it is hovering near profitability. Analysts say YouTube will bring in around $450 million in revenue this year and earn a profit. Revenue at YouTube has more than doubled each year for the last three years, according to the company.

- Posted using My iPad

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