How & Why Madison Avenue Is Killing YouTube (and what it can do)

Call it a subtle scent at this week’s Ad:Tech in NYC… Lots of discussion of online-video, even if not in proportion to online-video’s growing importance to the online-marketing mix. More interesting, however, is that most conversations didn’t use the two words: “you” and “tube.” People talked about contextual targeting, video-advertising networks, and even facial recognition.

Even though every attendee received a free Fast Company that featured YouTube influencers, the words “You” and “Tube” weren’t muttered except in disgust. Even Google’s mainstream booth didn’t showcase YouTube. WTF?

Why? How was it that people would only discuss YouTube when I brought it up? And why was all the feedback negative:

  • They’re not selling inventory well. They’re not even making it easy for us to buy it.
  • They don’t understand the role of the agency because they’re used to getting money through electronic bids.
  • YouTube sees agencies as unimportant middlemen between them and THEIR customers
  • If you don’t have $40 million, they won’t customize things for you.

The “Madison YouTube Snub” wasn’t about the proximity of ads to “consumer generated content,” or about metrics or targeting. It was simply that agency buyers (as haughty as I know they can be) aren’t being treated well.

What YouTube is missing is the “Great Irrationality of Marketing Spending,” something I’ve grown to understand even if I disdain. I’ve seen it closely from all three perspectives: as a content creator, a buyer, and an intermediary. While we direct-response oriented marketers (the ones who track A/B campaigns on Google OCD style) are about results, the vast majority of advertising spending is not rational or performance driven. There. I said it. Try to refute that fact.

I’m not suggesting that media buyers are behaving recklessly or spending without consideration of their client’s money. But I do know that when confronted with a new medium with unclear metrics, they buy based on a) what’s easy, b) what they understand, and c) relationships.

I know how devalued my 4-6 million monthly views on YouTube are, and how the cost-per-view is horrifically low. So this article is a bit biased. But I also know I can’t solve that myself… it’s going to take some improvements in San Bruno. I would typically provide this advise without public fanfare as “not to bite the hand that feeds me.” I wouldn’t have an audience without YouTube. But I owe it to myself and fellow creators to help YouTube solve its biggest problem: poor monetization of traffic.

So here are 7  tips for YouTube to win back the hearts and dollars of Madison Avenue.

  1. Be Nice. You don’t have to contort your business model to fit advertisers, but at least show them love.
  2. Know Your Customer. It’s only partially true that the big brands are your customer, Google. Don’t negate the influence of the agencies on how that spending is partitioned. Even the smartest and well-intentioned marketers defer to media buyers. Marketer have two years to chase ROI and can’t possibly get into the weeds of one medium — much less one property.
  3. Teach Google sales people about YouTube. They simply don’t understand how to sell display advertising, much less video. It’s really quite sad.
  4. Educate. As market leader, it’s Google’s responsibility to set metrics, validate the medium, and educate buyers AND key influencers. Don’t expect logic to prevail, or it will be 2012 and Madison will have jacked up competitors. If I don’t see some ROI studies in 2011 published by YouTube and Forrester, ComScore, TubeMogul, Jupiter, eMarketer, or whoever… I’m going to show up to San Bruno with poop on a stick.
  5. Create an East Coast sales office for YouTube. Do it now. YouTube is floundering in silly pods, and there’s not enough pretty faces greasing agency palms. I resent it too, but it’s how dollars flow.
  6. Decentralize. Agencies do a lot of stupid things, but they know the importance of small. Google is too layered to move in the agile way that’s required of new media, and it’s killing itself.
  7. Get Creative. You don’t need to accept ad units that piss of your viewers, which is a more important stakeholder than advertisers. But explore new options, partner with greater trust, and don’t expect video to be monetized with the simple standards of your cash cow (paid search).

Any other tips? Or are you just gonna hope it takes care of itself?

Can Google Sell Online Video Ads?

There’s been a lively debate recently among online-video enthusiasts about Google/YouTube’s capacity to sell display advertising. Sales people need different skill sets selling paid-search (automated, measurable, bid-based) versus display advertising (which is less measurable and more like selling television or print). To understand the distinction, see Google’s video; this is something we’ve been exploring at WillVideoForFood since Google bought YouTube in 2007. While Google has deep relationships with top companies and industries, it has only recently put emphasis behind non-search advertising.

YouTube’s display team (a few dozen) is rather small, and most YouTube ads are sold via Google Adwords not the dedicated team. While the display team sometimes lands some comprehensive ad buys with advertising agencies and brands, most monetization on YouTube is marginalized. The CPMs (cost per thousand) are so disappointing to some creators and online-video studios that some (from Next New Network and Revision3 to TheStation) have begun to sell their own inventory, or partner with ad networks that can attract better monetization for their views. Increasingly YouTube has provided creators and intermediaries tools to sell their inventory directly.

That said, there was some encouraging news from Jonathon Rosenberg, Google’s SVP for product management. According to this eWeek piece titled “Google YouTube, Android Drive $3.5B in Ads.”

Google’s display ad business… operating at an annualized run-rate of $2.5 billion. That’s counting YouTube ads, and all non-text ads running on Google’s network and DoubleClick networks, Jonathan Rosenberg, Google’s senior vice president of product management, said on the Q3 earnings call. “You guys always ask me (referring to analysts)… where’s your next multi-billion dollar business after search,” Rosenberg said. “There’s your answer.”

Free Tools. No Ads. We Make It Up in Volume.

Daisy Whitney gave two examples of companies shifting from a free to paid model. I agree that “training the customers early to pay” is good advice, but I also like other model… give it away for free, then offer meaningful upsells. For instance, I’d probably pay for Tubemogul because it saves me the hassle of visiting a number of online sites to distribute and track my videos. Likewise, I just upped my YouSendIt account to a monthly fee… it’s got a 2 GB limit (and I was always just a little to bloated for the free one), and it remembers my e-mails.

So yes “train customers early to pay” but “free” is a good marketing tool. The trick is to develop value-add additions once you have a regular user base. Oh- and note Daisy’s focus is on B2B.

Charging for online-video content is not a good idea right now unless you’ve got INCREDIBLE content and a major following.