Advertisers to buy their way up the YouTube rankings

 

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Posted on 13 Nov 2008 at 09:40

YouTube has launched a new sponsored videos format, the latest step in its drive to grow revenues through advertising.

In an idea belatedly borrowed from parent company Google, the new program works by allowing an advertiser to decide which video they want to promote then choose keywords or search terms to target.

The advertiser can use automated tools to set daily spending budgets and place bids in an automated online auction, similar to Google's search programs.

When YouTube users search for videos it will display relevant videos alongside the search results which are labelled as "sponsored videos". Similar to Google's search marketing programs advertisers pay on a cost-per-click basis.

YouTube hopes to replicate the success of Google's AdWords text ad format by offering relevant but unobtrusive advertising.

Analysts have said it will take YouTube at least two years to start making a meaningful contribution to Google's revenue even as the popular video site rolls out numerous advertising initiatives.

YouTube has launched several ad formats in the past month as well as e-commerce initiatives, full-length television and movie pacts and will debut live event web casting next week.

Although Google does not break out YouTube's revenue numbers, analysts estimate it will bring in $200 million to $250 million (£134 million to £167 million) this year, compared with the parent's approximately $20 billion annual revenue.

Investors have voiced concerns about when YouTube, which Google paid $1.65 billion for in 2006, will start to deliver revenue and profits in line with the potential of its huge visitor numbers - more than 330 million worldwide users in August alone, according to comScore.

Author: Reuters