According to The Independent (13/06/08) having paid 848 million for YouTube in 2006, Google are still scratching their heads to find a money-making formula for the site. With over six million videos and nearly two billion views in the first year, by now one would think the financial and programming gurus at Google should have resolved this issue, but alas they have not. So what is going wrong? How can YouTube be turned into a money machine? In essence there are two strategic problems that need addressing.
Firstly, the current belief that advertising contract negotiations have to be a) complex and b) conducted online is not a method that appeals to commercial marketers. The prevailing opinion of online corporations that life does not exist outside of the Internet is not only false but blinkered. To attract advertising revenue from large corporations, YouTube has to adopt a strategy of face-to-face negotiation between salespersons and corporate marketers. Leave the legal jargon for the solicitors to sort out.
Secondly, the Google veil of secrecy needs to be lifted. Marketers base their promotional campaigns on sound research and statistics. YouTube's research programs are limited and ineffective. For example, they provide view details for Europe, but not for the UK. Similarly, there is limited research statistics in terms of interest groups. No advertiser in their right mind is going to splash cash without the benefit of detailed statistics. The YouTube brand channel results show evidence of these failings. Since inception in 2006, although over two million have viewed the chanel only four thousand organisations have subscribed. Google must provide more research and traffic details if they want to attract serious advertising revenue.
Yes YouTube can be financially successful, but only if it operates a strategy that appeals to the whole of the real world, not just the online community.