Description

Google has acquired YouTube for $1.65 billion. To understand the market dynamics of why this makes a lot of sense, get the download from Forrester's Charlene Li. She thinks YouTube has gotten it right in many ways, specifically as an advertising platform. She says that YouTube has created communities around clips, a great environment for contextual advertising.

Transcript

Forrester's Charlene Li on Google's YouTube Purchase And basically, by YouTube isn't just the fact that it’s growing but they’re getting this people to come back, week after week, day after day, month after month and continue to see the videos. And I think that this was so they make it so easy to find these things. And also, add more of a social component to it as I can add favors. I can share that with all the people too as well. It is just very funny with the small SIM pets and very humorous and kind of that keeps going up let’s say for a short cycle again. The more people see it, the more you're likely to add things on to it or to footage collections, add comments on to that. The business model has always been about any media companies that I have eyeballs. I can sell to as eyeballs. So it is going to be an advertising model so I'm not so worried about what the business model for YouTube is going to be. It’s clearly going to be around primarily advertising because you can’t say no to 100 million people. We’re looking at this great information. You can contextually advertise to them. You know they have high speed access. It’s an advertisers love video so what’s not to love about them. I think the hardest thing will be to understand which types of advertising worked in that environment and in that case there will be a lot of experimenting around that. And I think frankly, it will be people who actually say, “Okay, let’s do a campaign. Let’s do a contest and upload your video for the next ad promoting the new Nike shoe for example.” And now it’s just be something fired with the people who just kicked off. You can’t answer better advertisers with Menthos and Diet Coke than what you're seeing today with all those extreme Diet Coke and Menthos videos that are going out there. Well, one of the key ways has always been around something bad around these videos which frankly people don’t really see that well because they’re watching the video, right? So, I think what’s interesting is if they are generating new revenues, one of the possibilities you’ve actually sharing that with some of the people who create the videos themselves. So a great example of that is the extreme Diet Coke and Menthos experiment for these guys put together hundreds of liters of Coke and they had it like Belazio fountain kind of display so they send a deal with Revver where they actually are sharing some of their advertising remedies back to them. And so I think that’s a great idea especially for some of these videos as I do strike a wish so to speak and generated a significant audience that if they’re going to create that and put the expenses to creating good video they should be able to share and the advertise revenues have come back to them. I think that’s going to be a nice for choice circle because if you have more people who make money from that, they’d spend more money creating good video and drive more people to that particular site too as well.