Monday, September 11, 2006

More on Youtube - My idea for monetizing it.

Since my last post, I've been thinking about what would work as an advertising model for YouTube.

Clearly it's not Paris Hilton saying "YouTube is the hottest place on the web, and that's where I want to be. It's Hot! (tm)"

I told you I liked Charlie's drop down menu brand embedding idea. The problem with that, however, is the same problem that mySpace has with ad networks. Companies simply are not willing to give away control of their brand like that.

I just hopped over to YouTube, and the first featured video is entitled "The Vomit Show." It's rudamentary animation of a guy with a chainsaw massacaring his friend, then asking him for forgiveness. My favorite quote, "you're the best friend a murderer could have."

Yes, I can just imagine those execs at Nike, Disney, Apple, etc. resting easy knowing that "The Vomit Show" is embedded with their logo.

Never going to happen.
A workable model for monetizing user generated content MUST give advertisers control over their brands.

The other stumbling block is the very same quality that makes user gen content so attractive to advertisers - the viral nature of the videos.

The reality is that most videos get about 1000 views, not a million views like the stars. And unlike other forms of entertainment, past stardom is not necessarily indicative of future success. Sure, LisaNova is going to get a ton of views on her next video, but that's the exception, not the rule.

Advertising on a viral video is a gamble. Once a video has reached 100,000 views, will it vault to a million? Will it peter out? Who wants to advertise on a video that's already reached a million views and has saturated the market in unbranded form? It's like the stock market.

My solution to both these problems is simple. Build an ad market into YouTube - half eBay and half Adsense.

When a user uploads a video, they can choose whether to make it available for advertising. They can offer embedding, pre-roll, or other advertising opportunities, and can set minimum prices, just like an auction. Then advertisers can bid for those rights (or even a buy now feature?).

Most advertisers will probably gamble, trying to find that breakout hit just before it skyrockets - a video reaches 100,000 views, then it gets really hot on the market. I imagine Lisa Nova announcing her new video and accepting bids before it premieres. And just like adsense, some advertisers with small budgets can appeal to a niche market by finding the right niche video that 1000 people will see.

I remember a few months ago, Howard found a great video of a golf performer he wanted to use as advertising for GolfNow, his company that sells last minute tee times. With the market in place, he could have bid on the rights to the video, gotten it branded golf now, and started using it - a five minute process.

I like this concept because it exploits what's really exciting about user generated content - the big hit, the undiscovered gem, without diluting the advertiser's brand.

You could also implement this idea as a third party vendor - users on popular video sharing sites could tag their videos signaling their interest, and the transactions could occur outside the community. The user would just replace the unbranded video with the branded one. This would be much less elegant, and maybe impractical, but it's possible.

That's my take - I'm still on the hunt for more good ideas...


Blogger Howard Lindzon said...

Thats a good one my friend. You should be an entrpreneur!

Just wait allittle till the show is a hit first

2:04 AM  
Blogger Jeff Marks said...

Great man - really freakin' great!

9:56 PM  
Anonymous Mr Angry said...

I think you're glossing over the viewer experience a little. Pre-roll ads would kill the popularity of YouTube (or any video service). I think YT might actually be close to a successful model - featured commercial videos.

Your idea generally could work well but I think the type of inserted advertising is critical. Maybe a return to the old "brought to you by" days is in order - companies could buy popular personalities to shill for them. I know I'd sell out for about a buck fifty.

4:31 AM  

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