Over the next two years, YouTube is expected to make a real impact on parent company Google. The user operated website was purchased by Google back in 2006 for $1.65 billion and is expected to earn $200 to $250 million this year, a small percentage of Google’s revenue. The site plans on increasing revenue with a new advertisement scheme, full-length video pacts with CBS Corp, and a budding expenditure into e-commerce.
The main focus in YouTube’s new advertisement format should be ensuring the satisfaction of the users. Since the site in operated mainly by the public, to develop a plan that disrupts the ease of user to user communication can only halt the growth of YouTube. The site definitely needs to strategize in terms of developing a new advertizing set up. Unlike videos up on television channel sites and news sites, YouTube is run by the users and the same advertisement schemes that work for ABC.com or msnbc.com will not impact YouTube in the same way. ABC.com breaks up its videos with advertisements and has an ad before the video begins. But for the average YouTube video, a thirty second ad is an insufficient promotional technique since the videos on the site are usually just two to ten minutes long. These thirty second spots do not seem to be compatible with the users of the site. Many users have no interest in watching thirty seconds before a 120 second video, and discourage them from using YouTube. Pre-roll ads have the users abandoning their intended videos more than half the time.
YouTube needs to become creative in its advertizing set up to prove to Google that the site was a worthwhile purchase. All of this needs to be done while still keeping the users of YouTube content with the site and encourage more growth. While the full length video deal the website has created with CBS has proven advantageous, the third party management disturbs the traditional user operated format that YouTube became famous for. CBS sticks to the tactics of its own video advertisement setup, similar to ABC’s, and plays pre-roll, mid-roll, and post-roll ads throughout past series like Beverly Hills 90210. While the revenue acquired from full length videos is shared with YouTube, the deal separates itself from the YouTube of pirated and homemade videos.
One new ad format YouTube began to implement is in-video ads. The ads are displayed during relevant videos with text moving across the bottom of the video. The abandonment rate for in-video ads in a mere ten percent, but the actual use of the rolling ads is also only ten percent. The ads are eighty percent transparent, but their presence has some users upset. YouTube is meant to be a place for the general public to put up videos and communicate with one another. With the pressure from Google for growth, YouTube needs to allocate the proper space for ads while still maintaining the same user oriented face that it began with.
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One of the worst things is when you go to watch a video and there is an advertisement at the beginning of it that you have to sit through and watch. Also, when there are advertisements on the bottom of the actual video you are watching, it is extremely distracting. I think YouTube should place the advertisements around the edges of the video. The user will definitely notice and look at the advertisements and at the same time it won't annoy them because it won't be placed on the actual video.
I think YouTube should monitor the videos you are watching and then base the advertisements off of what you are typing in the search bar. For example, if you frequently type in some type of sport, whether it be a game or player, YouTube would then place advertisements around the video about upcoming sports games or the new and latest type of sport equipment.
YouTube would be able to make a massive amount of money off of their advertisements. Many companies are interested in getting their advertisements on YouTube because it is such a popular site that is vistited hundreds of thousands of times each day. If those advertisers are able to pull in just a couple thousand people per day, they will be able to dramatically increase their amount of sales to new customers.
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