What Can YouTube Learn From Search?

By Aaron Goldman, VP Marketing & Strategic Partnerships
Appeared In MediaPosts’s Search Insider

In my last few columns, I've been exploring the role of search in the media mix and the role of search companies in the innovation and integration of search marketing. Today, I want to focus on one particular company that has not been generally associated with search, but stands poised to bring bring the key attributes of search marketing to a more traditional environment. If it succeeds, it will not only reap significant advertising revenue for itself, it will set the model for an entire media sector scrambling to find a way to replenish eroding marketer dollars and consumer engagement.

Who might this lucky trendsetter be? You guessed it--YouTube.

The TV industry is currently reeling from the shift in media budget to other media. A lack of advertising accountability (aka tracking), engagement (those pesky DVRs!) and flexibility (in terms of pricing, creative format, etc.) have marketers flocking to Web-based platforms--and search marketing, in particular.

YouTube has the opportunity to resurrect video advertising. Given its robust platform and its immense popularity, YouTube is uniquely positioned to introduce an ad offering that marries the best of the search world with the best of the TV world.

The Best of the Search World

Proactive Consumption--similar to search as we know it today, on YouTube, consumers proactively seek out content by keyword or by popularity (PageRank, anyone?) All content is available on demand, and is consumed actively as opposed to passively. Advertising in this environment can and should be targeted, based on what we know about the user from his or her search. It should also be user-initiated and non-interruptive--keeping the consumer in control.

Mass Customization--with search, every ad can be customized based on what we know the consumer is looking for or has looked for in the past. On YouTube, each ad can and should be targeted, based on a query or past viewing behavior. It's unlike traditional TV, in which every person watching a particular channel at a particular time is exposed to the same ad.

Instant Point-of-Need Direction--typically, with search, a Web site is the destination a consumer is looking for, and marketers can point people to a page on their site that best meets their needs. However, this is changing--as evidenced by Google's moving its video link to its home page. More and more, consumers are looking for alternative forms of content. Now, instead of a Web site, a video can be the destination. And an ad in this environment can and should provide consumers with the ability to instantly take the next step--whether that is buying a product, downloading a coupon, finding a location, etc.

Dynamic Performance-Based Pricing--there's no question that the CPC auction model is one of the key drivers behind the rapid proliferation of search marketing. This pricing model brought a level of flexibility and accountability that was previously nonexistent in advertising. Hopefully, YouTube can resist the pressure to price its ad units on a CPM basis to align with traditional TV GRPs. No question--it will be hard for YouTube to pass up the "guaranteed" revenue that CPM pricing provides. Especially given the fact that it has millions of dollars in hosting fees to pay each month, and as yet, no significant revenue stream. However, with YouTube's massive scale and long tail -- 20 million monthly unique users and 100 million DAILY video views--an auction CPC model is likely its best long-term option for maximum inventory monetization.

Alas, for all its strong features, search marketing does lack some vital attributes of the TV ad environment.

The Best of the TV World

Sight, Sound, and Motion--these three words have been the crutch of every brand marketer that ever resisted allocating budget to search. There's no question that it's easier to convey core brand attributes and resonate with consumers through video versus 95 characters of text. Scale--for mass marketers that want to reach vast audiences, the reach of TV is unparalleled. Currently TV reaches 111 million US households -- about double the amount of people using search engines on a daily basis. While YouTube has nowhere near that kind of reach, it could one day, as new products like iTV from Apple bring online video to television.

The Best of the YouTube World

Passionate Audience--one aspect of social media that's truly unique is the forum it creates for audience participation. YouTube's slogan, "Broadcast Yourself," embodies the environment it has created. For whatever reason, part of this "expression" seems to be a resistance to all things "corporate"--advertising included. However, Google was in a similar position back in the day. It had a loyal, viral audience that it was scared of alienating with advertising. Nonetheless, it was able to win over consumers by providing ads that actually added value without interrupting the user-experience.

Passionate Contributors--what about the people producing the videos? Just like content publishers share in revenue via Google AdWords or AdSense distribution, so, too, should video producers get a piece of the action from YouTube. This would certainly encourage greater volume and quality of submissions. YouTube appears to have embraced the concept of revenue sharing, recently announcing a deal with Warner Music. How long before it creates a framework for all content producers--large and small--to profit?

Participatory Advertising--YouTube recently announced the launch of its first two ad concepts--Participatory Video Ads (PVAs) and Brand Channels. PVAs are user-initiated, and incorporate user-feedback to encourage engagement. Could user ratings be the first step towards a Google-like Quality Score? And Brand Channels feature a self-service interface for marketers to adjust their placements themselves. Can tools for auto-optimization be far behind?

Now, by no means do these initial ad formats represent the perfect union of search marketing and TV advertising. But they are a step in the right direction--at least You Tube's not going to market with pre- and post-rolls.

With the pressure mounting for it to start making money, let's hope YouTube can stay the course and continue to roll out advertising products that draw from the success of search marketing. If it does, it won't be long before the traditional media world shifts from trying to guess Google's next move to thinking WWYTD?