Posted April 9, 2009 10:23 am by with 2 comments

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If you were making money off 9% of your inventory, how long could you stay in business? A lot longer if you had someone with pockets as deep as Google’s backing you, eh? According to Ad Age, Google is selling ads against 9% of its US video views—and while that figure sounds rather unimpressive, it constitutes at 50% increase over last year’s figure, 6%.

Yes, in the 2008 annual report, Google admitted that it still “has yet to realize significant revenue benefits” from the $1.65B video site, even though it’s by far the most popular video destination on the Internet. Some recent studies suggest YouTube stands to lose $470M this year. As Ad Age puts it, YouTube is still “Google’s toughest sell to advertisers.”

Meanwhile, YouTube is expanding one of its money-making programs (which means it’s successful, right?). Announced six months ago, Click-to-Buy adds links to purchase copyrighted music featured in videos. The new expansion will bring the service to eight new countries, including the UK. The program was already running in the UK, which is notable because recent copyright disputes between British record companies and the video giant, YouTube blocked access to thousands of music videos in that country.

In the announcement, Google links to a recent study in the UK that showed that 50% of adult users in the UK went on to purchase music after watching a YouTube video. 36% actually bought a CD (how 1998!), while 15% went for the digital download. An additional 7% purchased concert tickets. Could all this be a move to help the music companies and Google work out a deal?

Click-to-Buy places an overlay on professional and UGC videos containing copyrighted music (although a quick search of YouTube shows that his is far from universal—no pun intended), as well as links below the video:
Google, the music company and the MP3 vendor all make money from this arrangement (in a typical affiliate kind of way, I’m sure). Originally, the links only appeared below the video; the overlay has been added since the original announcement.

Have you ever purchased a song through Click-to-Buy? Do you think you would? Do you see other opportunities for expanding this type of deal (say, maybe, click to buy DVDs from movie trailers)?

  • I’ve often thought about adding YouTube video ad blocks to my sites but I think they are just to big and chunky to blend in. Maybe that’s why they are not doing so well. With regular google ads, you can make then seem as if they are part of your site.

  • YouTube is a really BAD place for most people to advertise. I wasted some money there, and will write a blog post about it eventually, but here are some of the major problems with it:

    – the videos are shown in “low quality” by YouTube. Users have to press the HQ button to get higher quality, and a lot of people don’t even know the button is there
    – you can’t have people click from the video to your web page. YouTube only allows videos to click to other videos, and if you put a clickable link in your text description, they can only click through if they click Open to get a more detailed description
    – there are very few useful statistics, like how long people watched the video, so it isn’t easy to make adjustments

    Pat O’Malley