Richard Siklos has an insightful article in the New York Times exploring why Google Inc., rather than a large media company, snapped up YouTube. The jury is still out, obviously, on whether the $1.65 billion acquisition is a smart move by the boys in Mountain View. But Siklos points out that the big-media dinosaurs still have some major reservations about buying financially unproven companies (YouTube is about 18 months old and isn’t profitable) after several dot-com-bubble-era fiascos. The deal also may have made a lot more sense for Google because it needs to extend its paid-search advertising reach; it should be viewed in that context, “rather than as a media play,” Time Warner president Jeffrey Bewkes told Siklos.
There are questions about how effective Google will be in selling ads on a site supported by user-generated content — some of which is raunchy or stupid or worse and would be ill-suited to many marketers. The Chicago Tribune’s Eric Benderoff explored the risks marketers face in trying to convey their messages on social-networking sites like YouTube, MySpace and Facebook, where the audience of teenagers and twentysomethings also can be rather prickly about advertising. There will be ways to do this effectively on YouTube, I suspect. The short ad video clip before a smart user-generated piece can be tolerated even by youngsters with the narrowest attention spans. Google will clearly face challenges trying to match up advertisers with appropriate content. Fortunately, the company has the kind of technical wizards that may be able to pull this off.
Meanwhile, Google is striving to appease any big media companies worried it may seek to compete with them in the content arena, says the Financial Times. The company has often said it’s eager to help the world find the information it wants, but it’s not interested in creating that content itself.