April 21, 2006 10:23 AM PDT

YouTube: Too rough for advertisers?

A closely guarded secret at video-upload site YouTube is the company's plan to sell advertisements. The strategy is even cloaked in a code name.

Madison Avenue is keeping a close eye on what kind of advertising model the top player in the burgeoning market will adopt. YouTube has successfully attracted a large following by becoming the master of ceremonies for an Internet variety show that offers a stage to homemade-movie makers. To cash in, the company has set its sights squarely on the $12.5 billion online advertising market.

Video is blossoming on the Net as large numbers of consumers, linked to the Web via high-speed connections, search for alternatives to television. Some advertising experts wonder whether YouTube and competitors such as eBaum's World, AddictingClips.com and Break.com can make a living out of presenting amateur videos. The video clips, which can range in length from just a few seconds to 10 minutes, are often wickedly funny but sometimes veer to the macabre, mean-spirited or to the just plain gross.

On most of the upload sites, viewers can witness bloody fistfights, half-dressed teenagers gyrating in their bedrooms, or spectacular car and plane wrecks.

"It's not a proven business model yet," said Jupiter Research analyst David Card. "There will be some advertisers who won't mind sponsoring lots of crappy content cause they want to get in front the kids who go to these sites. But there are lots of advertisers who don't want anything do with it...One thing I can guarantee you is there's not enough advertising dollars to go around."

User-generated video sites have two things going for them, said Gary Stein, director of strategy at Ammo Marketing in San Francisco. First, these sites are attracting a large and hotly sought-after audience: males between the ages of 18 and 34.

"These sites will be totally attractive to advertisers for one reason: numbers," Stein said. "Their audience is big and growing and their demographic are young males bored with cable and broadcast TV and who are spending more time on the Internet."

The upload sites also are banking on video, which is a proven vehicle for delivering ads and one that advertisers understand after a decades-long relationship with TV.

Ads called pre-rolls, usually 15-second commercials that appear prior to the featured video, can generate big fees, Stein said.

Studies show that audiences watch the pre-rolls and that their messages stick with them longer than other ads, Stein said. Karl Heberger, advertising director at eBaum's World, one of the top upload sites, agrees with Stein. But you won't find any pre-roll ads at eBaum's World.com.

Catering to the audience
The reason is eBaum's World executives fear they might alienate many of their 900,000 daily unique visitors if they force them to endure a 15-second spot. In comparison, many TV commercials run a minute long.

"We specialize in short clips for the ADD (attention deficit disorder) generation," Heberger said. "If we ran a commercial in front of that, it wouldn't make sense. We don't want to turn off our users."

Even if they opted for the pre-roll ad, Card says most advertisers wouldn't get too excited. How much message can you convey in 15 seconds? he asks.

Visitors to eBaum's World--a company Heberger said is profitable--will find a mixture of ads, including banners, and some that stay in the user's view as he or she scrolls up and down a page. One movie ad found on the site automatically begins playing a short trailer once a computer cursor moves across it.

CONTINUED: New model for a new market…
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9 comments

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not 15 seconds
The ads dont need to be 15 seconds. 3 - 5 seconds is enough when the whole program is only 50 seconds. The bigger problem is the technology that buffers the pre-roll for 5 seconds, and then breaks for another buffering session for the actual content. Make it seamless and there will be no problem. Or put a banner under the content for as long as the content flows. I claim a patent on that delivery method!!!!!!!
Posted by gggg sssss (2285 comments )
Reply Link Flag
Video Quality sucks
Why would any advertiser pay? The video quality is so poor; it amazes me how this company got funded by a VC (then again the VC's really don't know much in anycase, do they?)
Posted by alansegal (17 comments )
Link Flag
Ebaum's World = Bad News
EBaums World is heavy on the adware. Their toolbar has a variation of the ISTBAR parasite in it.

Details: <a class="jive-link-external" href="http://www.siteadvisor.com/sites/ebaumsworld.com" target="_newWindow">http://www.siteadvisor.com/sites/ebaumsworld.com</a>

They have also been a Gator/Claria ad partner in the past.

127.0.0.1 ebaumsworld.com

BMR777
Posted by BMR777 (61 comments )
Reply Link Flag
Why is no one mentioning....
The fact that YouTube is a place for egregious copyright violations
and that advertisers on the site would be held libel for these
offenses. Have we not learned any thing from Napster? Do you
really think an advertiser from Madison Ave. is comfortable with
advertising against stolen music videos, TV clips, and other
copyrighted content? I am perplexed at the lack of
concern....hmmm
Posted by Guillaume123 (4 comments )
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Billions of page views vs. billions of advertising dollars
Advertisers are willing to spend billions in on-line advertising. Google has more advertisers than they have quality inventory. Google reportedly had a billion dollars of ad commits that they couldn't book this qaurter due to lack of quality page inventory. MySpace, YouTube, and others have billions of page views and lots of buzz...but how can the advertising be targeted? Remember, Google and other CPC companies only get paid when a user clicks on an ad...not just a view. Advertisers are also worried about being associated with unpredictable, and perhaps objectionable, content from uncontrolled user generated content sites.

Advertisers could opt for simple banner ads and pay much lower CPM rates for page views rather than CPC clicks. Google doesn't want to engage in display banner ads. They prefer targeted text ads that pay per click. There are billions of dollars on the table so there will be a solution...it is just a matter of time.

I wrote an in depth blog article on MySpace and YouTube advertising potential at <a class="jive-link-external" href="http://dondodge.typepad.com/the_next_big_thing/2006/04/myspace_youtube.html" target="_newWindow">http://dondodge.typepad.com/the_next_big_thing/2006/04/myspace_youtube.html</a>
Posted by Don_Dodge (64 comments )
Reply Link Flag
YouTube is another league and shouldn't be compared w/ ebaumsworld
I'm pretty sure, that YT will implement a very smooth and elegant way to include ads (or whatever). they won't disturb the users.

check out a comparsson of 40 online sharing communitiees: YT smokes clearly the competition in every aspect and thus can and will implement completely new models far away from the classic ads scheme!

Comparison of 40+ online video sites
<a class="jive-link-external" href="http://www.mustseeblog.com/?p=68" target="_newWindow">http://www.mustseeblog.com/?p=68</a>
Posted by g4e (6 comments )
Reply Link Flag
Ad/Content matching
We see ads for products next to content about accidents and tragedy everyday. It's called local news and it's big business. Why not on the web...
Posted by zwebusa (2 comments )
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Break.com steals from it's users
On YouTube, My videos over the last 7 months have reached 1.6 million plays under the username: SMPFILMS but when I went to post a video on break.com, they took my video.. removed my company logos and hosted it on their main page (this is refering to the video titled "Broken Leg"). They offer anyone whos video makes it to the main page $250.00 US, but when I went to collect my money, they denied me my profits, even after all the paperwork was completed. I have been contacted by other victims of break.com so I know I'm not the only one. My username on break.com was SMPFILMS as well.
Posted by smpfilms (1 comment )
Reply Link Flag
You tube is an effective advertising medium in most of the emerging markets. In emerging markets only 5 / 10 % of the population have internet access, furthermore due to disparity of socio economic status, this internet population controls significant portion of the disposable income.

If one adds a further filter of Broad Band internet access, one is talking about crème de la crème, this makes advertising on you tube in a country like India worth it's weight in GOLD.
Posted by VivekBhargava (1 comment )
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