The phenomenon of consumer-generated content has advertisers scratching their heads over how to best tap into the lifeblood of a fluid, rapidly-evolving and somewhat undefinable beast. The surge of interest in video sharing websites has only complicated the quandary for marketers.
YouTube — one of the most popular video-sharing sites currently with more than six million unique users daily, according to the company's details — and Google have effectively initiated an entirely new media channel, one that offers impressive global reach and a plethora of interactive touchpoints. But a prickly emerging issue is that of revenue. The millions of consumers tapping in each day to a host of video-sharing sites suggests that potential does exist. But to date, advertisers and the media owners themselves are treading carefully.
1 YouTube launched in February 2005, but didn't gain momentum until a hefty cash-injection from venture captial firm Sequoia in November last year. Google Video launched in the US in January, and has since rolled out in a number of other markets. Other players such as iFilm, MetaCafe, IFC MediaLab and Vimeo have also become more visible, thanks largely to increasing penetration of high-speed broadband connections.
2 Aside from the consumer-generated content — which includes everything from pictures to home videos — both sites host TV commercials, viral campaigns, music filmclips and movie trailers, along with content from TV networks and film production companies.
3 Both YouTube and Google Video have signed deals with some major media brands, although relationships have not always been amicable. In February, US TV network NBC ordered YouTube to remove several clips, citing infringement of copyright. Four months later, NBC reconsidered and signed a strategic partnership, giving NBC, among other things, the right to create an NBC Channel on YouTube. Google Video also hosts content for purchase, including CBS programming and NBA games.
4 For now, revenue generation has remained in the background. Currently, consumers contribute a tiny proportion of money, with much of the content available for free. Observers agree that the more important objective of a channel in its infancy is to create a dependence on the site on the part of the consumers, before it shifts its focus.
5 Industry watchers believe the sites will adopt a dual-revenue stream model — the small gains coming through a flat fee payable for all the content, with perhaps an additional fee for premium content provided by the professional media players, with large gains coming from advertisers and brands. The million-dollar question though, is exactly how long it will take. Google Video already allows contributors to set a price for their uploaded videos, and is also testing out banner ads and video ads within the user content.
6 Owners are eager to avoid too much advertising, while ensuring agreements with NBC and the like do not overshadow and over-corporatise the site —another consumer pet-hate. YouTube, reportedly, has cloaked its own advertising strategy in a code name, for fear of scaring off users. Advertisers are similarly wary, reflecting general concerns over the threat that user-generated content sites can pose to brands. There is no guarantee, for example, that an ad won't be matched up with offensive content.
7 Given the audience that sites like YouTube attract, however, it is a question of when rather than if in terms of advertising. The male 18- to 34-year-old demographic is highly sought-after, as is the ability to run video advertising. Industry watchers also believe that consumers generally prefer to allow some advertising if it means they can continue to view desired content for free.
8Media analysts note that, at some point, media owners will have to consider propelling revenue generation up the list of priorities. It's how high the priority rises, and with what effect, in which many are keenly interested. The likelihood is that sites will set up dedicated 'clean' areas to persuade wary mainstream brands to come on board.
