NEW YORK (AdAge.com) -- What a difference a year makes.
Twelve months ago, YouTube was trying to shake off its pariah status among all but the most risk-taking marketers. Today? Well, just try buying the home page.
Whether it ultimately becomes the profit machine Google hopes it will be -- or perhaps just mildly profitable, as expected in 2010 -- last year YouTube achieved something many thought it never would: It became a must-buy for entertainment marketers and an option for anyone trying to reach the younger demographic. That's been helped along by Google, which has rolled out literally dozens of ways for large and small advertisers to use YouTube, from big homepage ads to pre-rolls and overlays, paid placements and search ads over the past 18 months.
"When I took this job a year and a half ago, people kept asking 'What is going to be the equivalent of the Google text ad for YouTube?'" said YouTube Ad Director Shishir Mehrotra. "What we realized is there is no one ad format for video, because consumers come to YouTube to do different things."
The biggest evidence of the shift in market perception is YouTube's home page itself, which was sold out in the fourth quarter, and is the subject of bidding wars among movie studios on Thursdays and Fridays to promote weekend openings.
Lionsgate pioneered movie marketing on YouTube, and last year the rest of Hollywood grabbed the baton and started to run with it. Take "Avatar," the Twentieth Century Fox picture with $150 million in marketing behind it, which bought the YouTube home page simultaneously in 15 countries, used the online channel to drive viewing of the trailer, and invited three vloggers to attend the red-carpet premiere in London and make videos about it.
Likewise, the Friday before Warner Bros.' "Valentines Day" opened, New Line took the home page with an ad that allowed visitors to record and send a video valentine -- perfect for the YouTube environment. Increasingly, the studios are using YouTube in lieu of building an online presence for each film.
YouTube not only gets in front of a valuable audience when they want to watch video, it also allows the studios to make sure a trailer is sampled through paid media, something a marketing microsite could never do.
"The biggest marketing asset for any film is to show the trailer," he said. "When anyone seeks out some sort of visual they begin their search at YouTube."
In a lot of ways, YouTube is today what MySpace was in 2006, in terms of its role for marketers, but it appears to be avoiding MySpace's mistakes. When Google started adding big rich-media banners, as well as paid placements on the homepage, small producers and pundits fretted that it would kill off YouTube's essential magic: the ability to allow content to surface from the most unlikely places. But unlike MySpace, increased commerce hasn't diminished its appeal or its quirkiness.
Not only has YouTube kept growing, it's also still manufacturing that curious species of YouTube "celebrity" such as Fred Figglehorn and Lisa Nova. Ever heard of Shay Carl or Ray William Johnson? They're amateur comedians that each average more views than all the videos uploaded by CBS. Web-analytics firm TubeMogul says views for the top 25 vloggers grew more than 3% a month in 2009.
At the same time the number of video impressions that YouTube can sell to advertisers is growing quickly. Last week YouTube ad partners accounted for 44.7% of views among the top 100 videos compared to 36.3% six months ago. The more views generated by partners, the more revenue YouTube makes.
But YouTube is a key player in another building trend: the emergence of consumer brands as media companies themselves. As marketers increasingly produce their own video content, they are making it for YouTube, not for TV.
Adidas, for example, has a channel of videos that allow users to unlock challenges, watch from different angles, and play games. "Before you could just post something; now you have to put media behind it," said Chris Murphy, head of marketing for Adidas U.S. Factoring in the creative expense and the cost of media to YouTube, it becomes more expensive than an equivalent TV campaign, but Mr. Murphy said you're getting more than impressions. "It's very participatory; you could never do that with traditional advertising spots," he said.
YouTube hasn't solved its problems with film and TV producers, but over the past year a mutual understanding with brands has bloomed. "Twelve months ago people were still trying to figure out what YouTube would do; the hype was over and reality started to set in," said Andrea Kerr Redniss, a managing director at Publicis' Optimedia who placed two branded campaigns for T-Mobile on the site over the past year. "I think they needed this turnaround to prove they could be a viable means for brands to communicate with consumers."
Lessons from YouTube
YouTube figured out that rather than one solution to video advertising, there are many.
YouTube once had a reputation for being difficult to work with. Now it listens and provides solutions to brands.
PLAY TO YOUR STRENGTHS Entertainment marketers were the first to embrace YouTube, so the company ran with it and created home-page units and promoted videos the studios love.
As eager as YouTube was to get brand dollars, it wasn't willing to compromise on user experience. The result: YouTube is still the place unknown videographers can take on CBS.