Filed under: Products and services, Consumer experience, Google (GOOG), Marketing and advertising, Viacom (VIA)
From the people I talk to who purchase on the web advertising it looks like Google (NASDAQ: GOOG)’s YouTube has been a bust: the video ads are pricey and the results are iffy. Such things are the opposite of what Google is ideal known for (isn’t it about brutally scientific performance?)
Well, in today’s Wall Street Journal, there’s an excellent piece on the topic. Although the video site may attract one billion views per day, the monetization has been lackluster — it looks like annual revenues will be about $200 million or so.
There are a variety of reasons for all this. First of all, major advertisers want to protect their brands from being associated with racy content. Also, Google must deal with a copyright infringement suit from Viacom (NYSE: VIA) and so it is focusing on approved content, which in turn limits the number of advertising opportunities.
In addition, the video revolution is in the early stages. Remember, when internet ads started to emerge during the 1990s, the main buyers were upstart — not traditional — companies.
Then, there are also technical and execution problems. Google’s ad system is quirky and somewhat of a hodgepodge — not surprising given Google’s quick growth and entrance into many new markets.
Still, despite all the problems, it’s critical that Google demonstrates success with YouTube. By and large, the company has had a tough time going beyond its highly successful text-based advertising platform. However, in order to continue the growth, Google needs to show its prowess in other critical areas, such as radio, Television, display ads and … video.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar On the web Guide to Decoding Financial Statements
. He also operates MergerBook.com.
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