Business | Technology
YouTube's popularity with the public fails to sway advertisers
A recent video on The Onion, claims YouTube is offering $100,000 (Dh367,309) to anybody making a video "that is actually worth watching".
- Financial Times
- Published: 23:51 November 21, 2008
A recent video on The Onion, claims YouTube is offering $100,000 (Dh367,309) to anybody making a video "that is actually worth watching".
The joke hits close to the bone. However, it will sting all the more because The Onion has sold a flashy car advertisement, which runs before and after the two-minute film.
The majority of You-Tube's millions of clips fall well short of the professional content seen on television — and are struggling to attract advertising for that very reason.
Two years after it paid $1.65 billion for YouTube and 18 months after management publicly committed to generating serious revenues from its vast audience, Google is still falling short of its own ambitions in advertising sales.
Analysts estimate that YouTube will generate $200 million in worldwide revenues this year.
"YouTube is a runaway success in terms of usage, a runaway problem in copyright and a runaway failure in advertising income at the moment," says Ian Maude of Enders Analysis.
That is not to say that brands are not advertising on YouTube. Recent advertisers include Orange, Disney, Reebok and Sony Ericsson. Henrique de Castro, managing director of European sales and media solutions at YouTube, says adoption of YouTube from advertisers "is like a tsunami, it is coming at the speed of light. All of the top agencies today work with YouTube."
But many in the advertising industry are still holding YouTube at arm's length. "YouTube advertising does not perform anywhere near the way advertising does on other Google sites," says Robert Horler, managing director of Diffiniti, the online media buying unit of Aegis.
He says Diffiniti's spend on YouTube is "tiny — a fraction of what it could be based on YouTube's reach and coverage. And that is replicated across all the major agencies."
CBS, one of YouTube's largest media partners, has chosen to sell its own advertising around shows such as CSI and Beverly Hills 90210 which appear on YouTube, rather than using Google's capabilities.
Terms are confidential, but that is likely to mean Google takes a lower share of the revenues and bodes ill for its efforts to push harder into display advertising.
Google hopes that more premium content will boost advertising. Last week saw MGM, the Hollywood studio, and Fremantle, the television production company, sign deals with YouTube to put a limited selection of their back-catalogue on the site.
NBC Universal and News Corp have set up Hulu as an online destination for their premium content.
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