Comment of the Day

Erik wrote this in response to my YouTube post yesterday morning linking to John Battelle’s post:

The copyright stuff is an issue, but I think the big issue is revenue.

I suspect pre-roll and post-roll ads are a non-starter as far as the audience is concerned. Therefore you need video ads that users WANT to watch. Ads that users will voluntarily initiate.

Now on the YouTube site proper that's do-able (although requires more clever ads than repurposed TV ads). You can do collaborative filtering and associate advertising vingettes with user contributed content. Eventually it will be difficult to tell the ads from the content (if YT and advertisers both execute).

The real challenge is how do they make money letting third parties embed content in their own sites with YT paying the bandwidth bill. Is 3rd party embedded content just a marketing expense?

What percentage of YT content is consumed on the YT site and what percentage is embedded in other pages?

I like the idea of advertisers uploading their ads to YouTube and making them interesting enough that people will voluntarily watch them. I found a number of the “I’m A Mac” ads on YouTube but I doubt that Apple uploaded them and there are quite a few spoofs. Great stuff.

In this model, do advertisers pay YouTube a cost per play? And will that be enough to fund the rest of the service?

Comments

[Adam Elend]

The model I can see working for YouTube is an embedded ad strip at the bottom of the video frame, as you watch the video.

They already embed the YouTube logo there, and there's no drop off in user experience. An info bar at the bottom of the screen is so pervasive on television these days that I suspect viewers are conditioned for it.

[Derek Scruggs]

For the most part, entertaining ads are not usually the best performers. Think of all the funny beer ads you've seen. Now tell me - which ones are for Budweiser, Coors and Miller? You probably don't know. Most people remember the funny ad, but forget the brand.

By contrast, which auto insurance company could save you 15% or more? You probably said Geico. Their ads are less entertaining, but they're a great example of the power of repetition and a benefits-oriented message.

Adam is on the right track - direct response works best in this context.

[David G]

Eric, don't overcomplicate this. The IPTV format is perfect for post-roll ads since their is no "next" programming - the ad lives on the viewers screen until the do something else with their browser not just until the next show - I think that static print or rich post-roll ads may even be more effective than video ads but regardless, post-roll is the natural place to advertise in this new medium - as it allows content to be simultaneously ad-free and ad-sponsored - obviously sticky ads like the mac ads are the holy grail but we don't see many of those

[Josh Morgan]

The big question I have about YouTube, other than the copyright stuff, is how it relates to political ads. If a candidate puts their campaign ad on YouTube and is not charged for distribution, is the company essentially making a donation to that candidate that needs to be reported?

[Dino]

Guys,
I know there are some of you that like to watch ads, but isn't that during the Super Bowl only?

Given the choice of the TIVO age, let alone remote control...who really stops to watch an ad on tv, let alone online?

Ad revenue is tricky with video. Ok so they make an interesting ad, how long does that last before it becomes annoying or old? Not to mention a waste of your time.

On an earlier note for this thread: The newly launched 9thXchange has the answer to generate revenue for the artist and the consumer. And it can be with ads or without ads. www.9thxchange.com.

No it's not Youtube, Grouper, or Revver. However, the investors in the space I've talked to are looking for non-ad sharing type revenue streams - quite frankly when this takes off, it will be it.