The Marketplace Reader

YouTube’s advertising picture still fuzzy

Richard Core Aug 8, 2008

Will enough advertisers display their brands next to user-generated videos to make YouTube as profitable as television? Executives from video search and ad companies at yesterday’s RBC Capital conference in San Francisco don’t think so, according to the Digital Media column on C-Net.

[The executives said ] . . . user-generated videos like those on YouTube aren’t drawing any significant dollars from advertisers or agencies. Advertisers need to control their brand, and it’s seen as too risky to give up that control on a network with home videos or potentially pirated broadcasts. One executive went so far as to say that user-generated videos will never make money.

“It will be like instant messaging. It’s ubiquitous but no one makes money on it,” said Thomas Wilde, CEO of Everyzing, which hosts digital audio and video for major broadcasters such as Fox Sports and Cox Radio.

The column reports YouTube — which Google bought for $1.6 billion two years ago — is the Web’s fifth-most-popular site, but it has yet to make money from the massive video inventory it produces. A Fortune magazine story earlier this year said industry insiders estimate Google spends $1 million a day just on bandwidth to serve YouTube videos.

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