We’ve all seen ripped clips of “Saturday Night Live” and amazing sports highlights on YouTube. In fact, if you did a search, you could see clips from the Oscars moments after the live show.
If YouTube takes advantage of the potential advertising opportunities, it will generate undiscovered revenue. YouTube’s ads are mostly contextual overlays, a.k.a. normal, generic ads that have poor digital video streaming quality to them. It appears that this may change soon…
For Google’s 2006 $1.65 billion purchase of YouTube, generating revenue has proved difficult as other newer websites are catching up with its revenue streams. Google makes almost all of its revenue from advertising, and it should be quicker to act in tapping into YouTube’s advertising potential. Google’s attempts to capitalize on its investment affect many different YouTubers, from big media partners to music and video game fans—and not to mention, us, the advertisers. YouTube has (or we assume it has) long been aware of its platform but only recently has devised of ways to start profiting.
One big media partner allowed to sell video advertising is CBS. Aside from profiting through the actual sale of its videos, it can also profit from the video views, videos from its channel, and any videos that Joe Schmoe posts there that are CBS copyrighted. By running advertising against this video material, YouTube can give a share of the revenues to its advertising partners. According to Techcrunch, there is a possibility that YouTube will soon be expanding this concept to other media partners later this year.
General Motors and New Line Cinema are among those who have delved into YouTube advertising. Though the media companies and partners who participate with advertising clips on YouTube make up only roughly 4% of the videos, this is where most of the advertising revenue is coming from. Expanding this percentage can mean more revenue. One problem, according to Neo@Oglivy’s Sean Muzzy, is that "Most advertisers are still testing the waters on YouTube," and that “big advertisers may not be comfortable with their ads appearing next to amateur videos.”
Intellectual property rights are important to both advertisers and their clients. We make money by using every medium available. Advertising on user-generated content is a relatively new medium. This is the collaboration of digital video advertising and video sharing coming together.