YouTube Plus “Next New Network” Equals “Huh?”

First- the disclaimers. I share in advertising revenue from YouTube. And I’m a content partner for Next New Networks, but not an employee or quite the size of these guys. I’m just some marketing clown with a video camera, no writing staff, but 175 million views. Big deal. My blog’s still ugly.

YouTube Rumored to Be Buying Next New Networks... Perplexing But Interesting

So I’m not privileged to any discussions between YouTube and Next New Networks, and know nothing more about the alleged acquisition than I’ve read here. While I have been aware of rumors of someone acquiring NNN for a couple months, I didn’t even seriously consider the possibility that Google/YouTube would buy it. So it was fresh news to me when I got a text from ZackScott today (he wanted to brag about his recent GoogleTV gift, and how he’s become a bigger sellout than me).

My thoughts on the potential of a deal. First, “Why It Makes Little Sense At First Glance”

  • YouTube took Google far out of its core competency (from search machine to platform)… Next New Networks is another dangerous stretch. A real stretch. I worked for an Internet agency that was accidentally purchased by a telecommunication firm. That kind of stretch.

I can only imagine some of the conversations between the right-coast, roight brained NNN gang and the left-coast, left-brained engineers. It could be like a toaster trying to talk to a boom box.

  • YouTube already has deals with many content creators, so I’m not sure what it’s getting beyond some bright leadership, a library of content to monetize in new ways, and some production/marketing experience.
  • The relationship is strong between YouTube and NNN, so how is this strategic enough to offset the perceptions that Google is now encroaching on the content space? Could this send the networks a signal that Google is now a competitor to networks and studios?

Why It Makes Great Sense

  • I’ve written before that Madison doesn’t like YouTube (click to read “How Madison Avenue is Killing YouTube“). And there needs to be a buffer between creators and agencies. NNN could play a valuable role in buffering agencies from touching the YouTube rose’s engineering thorns… if YouTube/Google allowed it.
  • The control of NNN content will give YouTube a sandbox to try new content-delivery models via phone, television and mobile. It’s a sandbox but with real humans.
  • There’s a name for this. It’s called vertical integration, and it can be healthy as long as it’s not creating a monopoly (which clearly isn’t the case here).  Owning a network can help YouTube engage with other networks more effectively. A simpler example: if I run a line of beauty products, its worth owning one salon… I get real-world experience that rivals laboratory R&D, and it can inform my products.
  • This provides YouTube a presence on the East Coast (where most of the budgets originate) that is more meaningful than a sales office. Sponsored content, I believe, will be bi-coastal.
  • It could be a step toward better content partnerships. CEO Fred Seibert is a producer of some of Cartoon Networks greatest shows, and a former MTV creative director. So he’s got some clout in the entertainment world that can make/break YouTube. Having network experience inside Google will help Google be less aggressive with the advertisers YouTube needs to court. Oh, and by the way… NNN is one of the few web studios that has endured the implosion of the “New Establishment” (the name I used in my book to refer to emerging studios).

I think I sufficiently hedged this post so that I retain rights to say “I told you so” if this deal is a great success, and hires me… or if it flops insanely.

What do you think? Or don’t you care? See this is my  problem… when amazing news like this breaks, nobody in my IRL circle cares. Folks at my client and in my family don’t give a rats ass, so I need to work it out here.

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?

TubeMogul and DynamicLogic to Prove Video Sells

In this NewTeeVee piece by Liz Shannon Miller, Tubemogul CEO Brett Wilson announces research with DynamicLogic that will finally show the ever debated link between online video and sales.

He also proclaims his disdain for the words “viral video” and “view.”

TubeMogul's Brett Wilson Hints at DynamicLogic Study to Show Sales and Video Relationship. DynamicLogic is One of the Leading Web Research Firms.

With my luck this study will be released the day after my final manuscript is due for Beyond Viral. Don’t ask me when this book is published because I can’t remember. I see manuscript in a few weeks.

Beyond Viral by Kevin Nalty. You Can't Judge a Book By Looking at Its Cover

Hulu.com: Full of Hot Air; AppleTV Must Save Us.

I got all excited when I read that Hulu.com will distribute DailyMotion.com videos. Sadly, like most of the most-subscribed YouTubers, less than 5% of my traffic occurs beyond YouTube. I couldn’t even remember if I post to DailyMotion. That’s because YouTube dominates, but also because people on other video sites aren’t as loyal to them, and watch a fraction (maybe 5-10 percent) of the videos per week that a hardcore YouTuber devours. 

Back to Hulu. A search for “Nalts” on Hulu oddly produces just one result. One. A bit lower than the 739,000 items that Google finds. And it’s… a link to my fart video on “Funny or Die.” Not “Farting in Public.” No, the original short film, in which I fart at my son. That’s hot air, friends.

It doesn’t appear that Hulu is yet picking up the DaiyMotion videos yet. And who knows if they’ll go beyond “official content.” You see, a Nalts search on DailyMotion reveals HBO’s HookingUp as “Official Content,” but the Nalts videos lacks that badge o’ honor. I don’t expect Hulu.com to attract many fans of amateur short-form content in the near term. And we can be sure that long-form, network produced content will rise far above the charming little YouTube weblebrities. 

In a hurry? Let’s get to the point, shall we? May I just pop the friggin’ industry’s “Hulu proved TV online works” zit for a moment? Can I just squeeze my fat fingers around this lemming-like nonsense and shoot some pimple juice in your eye?

  1. First let me acknowledge that Hulu is far better than I ever expected. It’s simple, and it’s proof that networks can play well together… when facing a common enemy. The hulu party is over, however, once we all have media devices that don’t care where the video lives (hulu or nbc.com), because then the networks will then again fight to get viewers on their own sites again… where they have control of metrics and ads.
  2. I don’t yet watch a lot of Hulu, because I prefer to have my long-form media intravaniously dripped while I’m in a reclining position in bed. And I like the HD quality of AppleTV/iTunes, or the cost/convenience of my NetFlix/Roku device (all-you-can-eat movies for $9 a month plus a $100 device).  I tolerate my horrible Verizon DVR (with its perverse $19.99 monthly cost), but that SOB going OUT tomorrow afternoon. It will be replaced by a TiVo plus a $5 Cablecard rental. Oh, sweet TiVo. I’ve longed for your angelic plink sound for two years. I did manage to get Boxee to stream Hulu on my AppleTV (thanks Peter Coffin), but I lost all of that when Apple pushed out an upgrade over the weekend. I’m too lazy to reinstall it, and it was a clumsy interface and poor quality. But I still dig Boxee, and it’s new.
  3. But back to Hulu and its hot farty air. I swear I’m going to punch the next journalist that rants about Hulu’s profit relative to YouTube. For starters, have you ever purchased media? Any print/TV media seller will gladly toss in an assload of Internet ads as a “value add.” So the networks, in a fit to jolt Hulu’s economic story, simply stopped giving away free Internet inventory. Given a relatively lean cost structure (outsourced to India), the Hulu site was *poof* “profitable.” And let’s put profit into context- I’d estimate that 5-10 minutes of Superbowl ads made more than Hulu.com’s topline last year.
  4. There’s no mistaking that Hulu is perceived as “safe” to advertisers. Just quality content. No crazy consumer-generated videos that corrupts advertising as we know it. Who wants their Cash for Gold ad next to David After the Dentist? Hulu solves that passive-aggressive motive of the mass media buyer (who regrets giving up his art passion for a soulless existence buying inventory). The media buyer can reluctantly “get digital” without having to actually talk to his agency’s red-headed stepchild — the girl we like to call the digital media buyer (he doesn’t mind suffering her mindless droning at happy hour, but her good looks are offset by the fact that without them she’d be working at the Department of Motor Vehicles).
  5. Meanwhile we have to assume two things. First, Google will find a way to monetize its 90 plus percent share of online-video consumption beyond the “tip of the iceberg” it monetizes today. And sooner or later, Google will give larger networks a vehicle to monetize content that’s at least as good as Hulu. 
  6. So the market is maturing, and I underestimated Hulu.com. But ultimately the game changer is not a website with all of the networks shows partying together with ads. That’s progress, but that’s just the first step of a much more interesting movement.
  7. We’re getting so very close to having one dang media center in our home that has access to our own digital video, and web’s. I want comfortable access from any TV in the house, without 12 devices and contracts. I’ve got my money on Apple changing the game (like they did with music and mobile/pda/phone) in 2009/2010 with a new version of AppleTV (someone right that down). The Supercharged AppleTV is going to play better with YouTube.com and Hulu.com, and it’s going to provide the option to download and watch in HD (as it does now) or watch in lower resolution with ads for free. Maybe there’s a monthly fee, but not 8 different ones. 

And that, friends, is lovely. And the only loser in my futuristic super-media device that will be the Comcasts and Verizons, who know as much as elegant interface as I know about how to write a short blog post. I’ll be glad when we dissintehrmediate these fools (even if they supertax our bandwidth), and so will Hulu and the networks. Hey Verizon- love the big pipe you installed in my home, but I can’t wait to fall asleep to the sweet sound of TiVo and know I’ll never have to use your stupid interface again. 

Well now it’s 10:30. I think wifeofnalts will be asleep, so I can probably sneak in a few episodes of Season 3 Lost now. I borrowed this season after buying the first two on AppleTV. And now I have no patience for changing DVDs and suffering through their irritating introduction and transitions. Meh.

You laugh, but some jackass analyst is going to find a way to organize and profit from these Nalts-futuristic insights, and I’m posting this nonsense for free.