AdWords comes to YouTube?

Just as I thought: Google has started to <a href="
YouTube gets 100m ‘visits’ a day. Let’s say the cost of capital is 8%, about $300K a day. If Google puts some sort of Adword ad into each view, it takes only a bid of $0.30 to cover the COC at a clickthrough rate of 1% – both well within normal ranges for Adwords advertisers today.

Bad business sense? On the contrary, it makes perfect (ad)sense. Especially given Google’s underlying strategy – to cut out middlemen and reach consumers directly.”>monetise YouTube, by recontextualising AdWords for the video paradigm.

Everyone thought $1.65bn for YouTube represented a return to dotcom-era excesses. In fact, the purchase made perfect sense – when viewed through the lens of Google’s main earner.

YouTube gets 100m ‘visits’ a day. Let’s say the cost of the purchase capital is 8%, about $300K a day. If Google puts some sort of Adword/AdSense equivalent into each view, it takes only a bid of $0.30 to cover the COC at a clickthrough rate of 1% – both well within normal ranges for Adwords advertisers today. Monetising the consumer’s view of content, the same way AdWords monetised other people’s web pages.

Bad business sense? On the contrary, it makes perfect (ad)sense. Especially given Google’s underlying strategy – to cut out middlemen and reach consumers directly. Just as giving away gmail, Google Apps, Earth and the rest also makes perfect sense – because the goal is to drive further value into Google’s core product.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s