Some experts think that Google paid too much for YouTube, especially in light of its copyright-related legal problems (see Online File W7.8). However, Google may actually have gotten a bargain. Consider the following:
◗ Two-minute YouTube clips were just the start. As television comes to the Internet, dozens of companies are competing to become the networks of tomorrow. Whichever networks attract the most viewers will inevitably attract vast numbers of advertisers as well. YouTube’s ad revenue in 2007 alone has been valued at $200 million by eMarketer and Citigroup. And wherever there’s video programming, viewers will be seeing more video ads. One forecast from eMarketer predicts that overall video advertising on the Web (including video ads replacing banners on regular Web pages) will reach $4.6 billion in 2013, a sevenfold leap from the 2006 total of $410 million (SeekingAlpha 2009).
◗ Brand-created entertainment content. In 2005, Nike produced a pseudo-home video of soccer star Ronaldinho practicing while wearing his new Nike Gold shoes. In one week, the clip was downloaded 3.5 million times on YouTube (worldwide), providing Nike with tremendous exposure to its core, mostly young male, audience. As the younger generation moves away from traditional TV, it is shifting its attention to YouTube and similar offerings.
◗ User-driven product advertising. User-generated videos could be leveraged in a similar manner to product placement on TV. For example, although not intentional, a 17-year-old girl’s use of Logitech’s Webcam featured in a short clip on YouTube where she talks about the breakup with her boyfriend greatly contributed to awareness of Logitech’s offerings. The product placement trend is also expanding across the blogosphere, with Nokia promoting its new smartphone through the 50 most influential bloggers in Belgium and establishing a blogger-relationship blog.
◗ Multichannel word-of-mouth campaign. When Chevrolet decided to combine its Apprentice Tahoe campaign with an online consumer-generated media (CGM) campaign, it did not anticipate the additional viral impact of YouTube. On the Chevrolet site, users could create their own customized video commercial, complete with text and background music. Environmentalists took the opportunity to produce spoof videos and published them on YouTube. However, the wordof-mouth advertising Chevrolet received on YouTube was ultimately beneficial to Chevrolet. The Chevrolet site generated 4 million page views, 400,000 unique visitors, and 22,000 ad submissions in just six months.
Q: List the success factors from these cases.