Google's fuzzy YouTube logic

The marketplace appeal of Google's vaunted search-based 'targeted, measurable advertising' has fueled an ever ballooning market cap. What about YouTube? Will Google bring its 'targeted, measurable advertising' to clip-culture?

The marketplace appeal of Google’s vaunted search-based “targeted, measurable advertising” has fueled an ever ballooning market cap. Google’s search advertising growth rates must inevitably decline, however, as Google itself acknowledges (see "GOOG @ $510: Do you buy or sell?").

As Google seeks to grow through diversification, both online and off, it claims to bring its “targeted, measurable advertising” to print, radio, online video, soon TV…(see “Google’s ‘1 percent’”).

Can Google really turn decades old offline advertising into purely “targeted, measurable advertising”? Will Google make YouTube a purely “targeted, measurable advertising” platform?

In “Google to TV networks: Believe in YouTube,” I dissect one of the first public statements released from the Google owned YouTube. The press release is an amalgam of YouTuber viewing stats on CBS owned content headlined “After one month, CBS content among most viewed videos on YouTube, Nearly 30 Million Views Since Partnership Began Oct. 18.”

Google-YouTube and CBS strive to dazzle with impressive sounding YouTuber data:

CBS has uploaded more than 300 clips that have a total of 29.2 million views on YouTube, averaging 857,000 views per day, since the service launched on October 18. CBS has three of the top 25 most viewed videos this month (Nov.1–17), including clips from CBS’s Tuesday night hit drama “NCIS,” “Late Show with David Letterman,” “The Late Late Show with Craig Ferguson” and “The Early Show.” The CBS Brand Channel is also one of the most subscribed channels of all time with more than 20,000 users subscribing to CBS programming on YouTube since the channel launch last month.

Video views at YouTube can be likened to AdWords impressions at Google.com that provide soft exposure, but not necessarily hard ROI. At Google.com, advertisers are not charged for every impression, only for the impressions that yield click-throughs.

What is the equivalent hard ROI for video views at YouTube?

CBS indicates it seeks to drive YouTubers to its television network shows. But can such conversion actually be measured and counted, like a click through on a Google AdWord ad?

Google, YouTube and CBS are currently hanging their video hats on warm and fuzzy “beliefs,” not on hard, trackable conversion metrics:

Ratings for the network’s late night programs, in particular, have shown notable increases. CBS’s “Late Show with David Letterman” has added 200,000 (+5%) new viewers while “The Late Late Show with Craig Ferguson” is up 100,000 viewers (+7%) since the YouTube postings started. Although the success of these shows on YouTube is not the sole cause of the rise in television ratings, both companies believe that YouTube has brought a significant new audience of viewers to each broadcast.

Believing that YouTube “works” brings to mind the “old school” advertising maxim: "I know that half my advertising works - I just don't know which half."”

Google will need to show content owners harder ROI metrics than “beliefs” in order to maximize its own ROI on the $1.65 billion YouTube.

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