|Photo: Lisa O'Connor|
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Branded entertainment is Google's latest effort to make sure it leaves no stone unturned in its effort to make money on YouTube. Recent attempts include bigger home-page ads, post-roll ads and even buy buttons for iTunes and Amazon. But all those efforts don't change the fact that YouTube is only able to sell advertising against about 3% of all videos hosted by the site.
Branded-entertainment deals can be complex and difficult to replicate, and deals like Mr. MacFarlane's -- which has racked up more than 12 million views since it launched in early September -- don't come around very often. But if the strategy works, it helps solve two problems: Google gets to serve an ad that is more likely to be clicked, and YouTube gets a video it can actually make money from.
"Instead of connecting advertisers to users, we are connecting advertisers to content to users," said Alexandra Levy, Google's New York-based director-branded entertainment. "It adds another layer of complexity to the deal."
Google served "Cavalcade" like it would an AdSense ad on sites that appeal to 18- to 34-year-old men. On YouTube, the videos got home-page promotion and their own channel. The advertiser pays an auction-based rate on AdSense and a cost-per-thousand rate on YouTube.
Admittedly, it's a nascent business, and the ad model and revenue splits are still being sorted out. Dan Goodman, president-digital division of Media Rights Capital, which brokered the deal with Mr. MacFarlane, Google and Burger King, said the partners are still experimenting with ad mixes. "We are trying a lot of different formats in the Google network to see what kind of performance we get out of them," he said.
Google's second effort for YouTube is lower-profile: "Poptub Daily," a celebrity/entertainment interview series targeted at 18- to 34-year-old women. The show is sponsored by PepsiCo.
While Ms. Levy aspires to broker her own deals, some come through the door with creator and advertiser already connected. "In that case we are just distributing them," she said. "Frankly, it's an easy story: Use our distribution platform to get your content out there."
That was the case with Next New Networks' animated series "Nite Fite." Mars' Starburst, the series' sponsor, paid for the show to be featured in the upper-right ad unit on YouTube's home page, bringing more than 300,000 views in 24 hours.
"We are making significant revenue through our YouTube distribution," said Next New Networks co-founder Tim Shey. Indeed, he sees it as a business model for web video. "It's what YouTube should be doing, from our point of view."