Notes on the Google-YouTube Deal

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Most of the discussion about Google’s acquisition of Youtube.com has focused on two issues: first, whether Google overspent or underspent on the popular video-sharing site, and whether the acquisition was a wise one, given possible copyright liabilities Google may now be exposing itself to, given the free-wheeling and seldom policed nature of Youtube’s user-generated videos.

I want to open up a different line of discussion, which has to do with unanticipated difficulties that Google may have in terms of monetizing the assets of Youtube, which up until now have been very poorly utilized. Frankly, the advertising you see today on Youtube is junk, and has only the most tenuous connection with the content of any video content displayed on the site. For example, take the recent clip from Bill Clinton’s angry interview on the Fox News Network (which was most likely uploaded without the permission of Fox), which generates an ad for the Aberdeen Business School, a UK-based management school. A video entitled “Guinness World Record for Most T-Shirts Worn at One Time” generates an ad for “Top 10 Inkjet Sites.” Even the video message that Youtube’s founders produced to announce their site’s acquisition by Google produces a ridiculously untargeted banner ad reading “GED Information.” These ads are very poorly targeted, much more poorly targeted than the ads regularly seen running on publisher sites running Adsense code. One could argue that an ad server which simply spat out random ads would provide an equivalent or better degree of relevancy.

One of Google’s first tasks will certainly be improving the performance of Youtube’s contextual ads. But Google’s contextual algorithms will have a much tougher time being able to come up with meaningful matches with video content than with traditional text content. For example, the top-rated video on YouTube today (October 16) is a farewell message titled “Goodbye Martin” from a woman who recently lost her husband (for reasons which are inexplicable, this video produces an ad for “Rolex Replica Watches”). There is very little text on this page suggesting why this video is so popular: its description is opaque (“Martin’s wife, Teresa, explains Martin’s death and thanks youtube”), and the user comments on this video range from the unintelligible to the outright obscene. Even the smartest algorithm will have a very difficult time matching this video to an appropriate advertiser, should one exist. If this same content had been written in an essay form, or using tagged images, the task would have been much easier.

Of course, Google will certainly be using more than text-matching algorithms to serve ads, and may incorporate either pre-roll or sponsored-in-a-window ads which will persist through the viewing of the video. But the same problems will persist, because no algorithm will ever be as smart as a human in terms of being able to match ads to video content which defies easy categorization. Video is an inherently emotional medium in which ads which are even very tightly matched can backfire. A smarter algorithm might be able to serve better matched ads for life insurance, funeral parlors, or bereavement support services for “GoodBye Martin,” but the effect would be jarring.

Many industry watchers believe that search-keyed behavioral ad targeting would dramatically improve the relevance of ads delivered to most YouTube visitors. Google however, unlike the other online publishers and search engines is resisting a move to behavioral search advertising, yet ironically most all the banner advertising Mr. Frog saw on YouTube was served by one or more of the behavioral ad networks.

The plain and unavoidable fact is that a sizeable percentage of Youtube’s videos constitute inventory which is difficult or impossible to monetize in the same way that simple text-and-image Web pages are. Advertisers signing up for future contextual ad serving for video content need to be aware of these issues before they go into this new market, where no real rules exist and where the real payoff for marketers has yet to be established.

Mr. Frog is a leading Search industry visionary. Mr. Frog is a member of the Did-it Search Marketing team which accompanies him to most major
marketing conferences.

Notes on the Google-YouTube Deal
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