The world is waiting to see how Google plans to make money from YouTube. Increasingly innovative in the slap-an-ad-on-it department, Google is a victim of its own success, relying on clicks when YouTube is better as a straight branding vehicle, just like its television predecessor.
Google’s billions have relied primarily on the click, but the company is finding a different kind of audience frequenting YouTube—one that may not be so inclined to view or click on an ad, whether or not it’s placed mid-video, and perhaps especially not if it’s placed mid-video.
Some have suggested a search system like the one Google revolutionized to begin with: users search for specific keywords and there appear ads relating to those keywords. Heather Hokpkins, Hitwise’s Senior Analyst, reveals that the top search terms on YouTube traditionally aren’t the most clickable terms around.
About 72 percent of YouTube searches are music related, which isn’t the best news. In addition to legal battles with music labels and Viacom, terms like “lil wayne” or “beyonce” historically don’t produce a lot of clicks.
Writes Hopkins:
I looked at these top five terms to see whether they are seeing much paid search activity across the major search engines (Google, Yahoo! Search et al). In December, 5.10% of searches for “twilight” went to a paid listing, 3.08% for “lil wayne”, 2.29% for “single ladies”, 1.43% for “beyonce” and 0.28% for “soulja boy”. Compared to the term “wii fit” which saw 34.24% clicks on paid listings in December this doesn’t seem like much.
Hopkins argues a little is better than nothing in that respect, but I think focusing on search for purposes other than to monitor what’s hot is a bit regressive, and weirdly may not be regressive enough. Instead, YouTube should monetize content on its site the way video has always been monitzed: via eyeballs and demographic-branding. Dayparting, maybe, but one step at a time.
Here’s why I think so. Judging by the top search terms, the audience skews young, the type of young with little else but discretionary income, the type of young MTV has targeted for a couple of decades now. Even better news for YouTube (and Google) is that because YouTube is the kind of medium where users can seek and select video content at their leisure (as opposed to being at the mercy of TV schedules), it’s unlikely the site has the faddish quality of social networks or even cable channels and therefore is likely to retain its current audience’s loyalty as it grows older.
Whether YouTube will be considered “for old people” one day remains to be seen, but video channels may behave differently from social networks and from communication channels. It’s not a bad thing if a site switches from youth to older demographics—the older demographic is much larger and more divisible for advertising interests. Plus if YouTube stays on the cutting edge, it can retain younger, hipster audiences by maintaining its coolness factor.
YouTube already has an advantage over cable and broadcast in that it already controls the vast majority of video on the Internet. The smartest thing to do would be to strike deals with production houses, networks, music companies, artists et cetera for distribution rights—blanket licensing could cover users uploading videos and cure copyright woes.
The bigger advantage lies in that YouTube already has a huge talent pool from which to draw. The seventh most searched-for content, according Hitwise’s list, is for “Fred,” a character created by 15-year-old Lucas Cruikshank. And by the look of it, YouTube is about to lose this talent to Nickelodeon, a Viacom company, instead of capitalizing on the Fred show popularity itself.
Won’t it be ironic when a YouTube star gets his own Viacom show and YouTube is no longer be able to display his videos?
Google needs to stop looking at traditional internet ways to monetize YouTube and go back farther to traditional ways of monetizing TV content. They should license content they don’t own, and sign their own exclusive talent for original YouTube programming. They can sell ad space based on audience size to advertisers looking to reach a specific demographic. There’s no need for commercial breaks, just sponsorships appearing at the edges of the video screen.
If YouTube can do that successfully, when the TV-to-Web transition is complete, Google will be on top of the Web video mountain, streaming into millions of living rooms around the world.
