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Summary:

Brand display ads will be “the primary driver of monetization for video,” YouTube CEO Chad Hurley said tonight at an tech startup dinner in Palo Alto, but he went onto lay out an argument that there’s also a growing opportunity to make money from direct response […]

Brand display ads will be “the primary driver of monetization for video,” YouTube CEO Chad Hurley said tonight at an tech startup dinner in Palo Alto, but he went onto lay out an argument that there’s also a growing opportunity to make money from direct response affiliate deals. YouTube may even explore making products clickable within videos, he added.

“We’re integrating links to iTunes and Amazon for DVDs, CDs, and digital downloads,” Hurley said. “A lot of our content does drive awareness for music or for TV shows or movies, and a lot of our partners are really just excited to make that connection between the two — going from promotional, getting people to tune into a TV show or buy a movie ticket — to that direct response in terms of clicking to buy something.”

What he was describing are the Amazon and YouTube buttons first spotted in February of this year by Googlified in YouTube’s CSS file. I thought I’d seen them live on YouTube recently, but I can’t seem to find an example at the moment.

Hurley then described a potential extension of the company’s current in-video ads that would allow for product placement.

“That becomes even stronger as we experience that in the player itself, and maybe at some point it makes sense to have something identified to click within the video space — it may be a little bit too random, and the user may not understand it in a good way — but I think linking to products and services, that’s a big opportunity in terms of direct response.”

Many companies, such as PLYmedia, Overlay.tv, Asterpix, and VideoClix, are trying to do this, but none with the video library or reach of YouTube. It’s always possible that YouTube would look outside for a technology solution, but that’s not its habit. I asked Hurley for more detail after his talk, but he said he had to play coy.

Google CEO Eric Schmidt had previously said publicly that making money from YouTube would be “our highest priority this year.” I asked Hurley whether Schmidt meant the highest priority for YouTube, or for Google as a whole. “I’ll have to ask Eric that,” he replied.

The main point of Hurley’s speech at the event was to tell entrepreneurs the story of how YouTube came to be. Look for a video of the full talk coming soon.

Photo by Brian Solis.

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  1. More on how YouTube will try to make more money ¦ Online Media Cultist Friday, June 27, 2008

    [...] Gannes of NewTeeVee reports on YouTube CEO Chad Hurley’s comments at a tech startup dinner in Palo Alto, which reveals [...]

  2. Product placement/plugging and brand integration within video content are models that have been successful since the advent of TV. Maybe content creators should embed subliminal advertising as a test… seriously. Something has got to give. The ‘Big Brand’ advertisers that desire high quality programs online are craving for something like old TV to sink their fangs, and funds into.

  3. Final Tag | Youtube to become super-affiliate Friday, June 27, 2008

    [...] this newteevee blog post under more items on techmeme. You tube, according to CEO Chad Hurley, is all [...]

  4. Please Google, let the Youtube revolution begin. Let all the Youtube content producers activate automatic overlay advertising. Which should be advertising popping up for 5 or 10 seconds at the time at the bottom of the videos on the youtube.com page, embedded on other sites and in full screen mode. Youtube should use voice recognition and other content quality and relevancy algorithms to determine when to display those bottom 10% overlay ads.

    The day Google activates bottom 10% overlay ads, I expect that there will quickly be a billion views per month of Youtube videos with those overlay ads, and that will generate 15 million dollars per month to tens of thousands of Youtube content providers.

    Basically the day Google activates intelligent and automatic overlay ads, there will immediately be a whole new industry of 10 thousand profetionnal Youtube content producers worldwide which will be able to make a living at least make some significant part-time income providing always better and better quality content on Youtube. I expect that the quality of Youtube content will thus incease, thus attracting more viewers, to the point that within a few months there could be 10 billion views of Youtube videos with overlay ads per month, that will be a total revenue of 150 million dollars per month for all the independent Youtube content providers. That will make a yearly profit for Google in the billions of dollars just from Youtube, which will eventually be Google’s biggest source of revenue.

  5. Charbax, the way the audience question was phrased here was actually to ask whether or not contextual advertising would work for an entertainment medium like video or whether brand advertising would win out. Hurley started out by saying that brand advertising was the big opportunity, but then went off in a different direction to say this direct response stuff was interesting to him. He never came back to talking about contextual advertising, so it definitely didn’t seem like that’s an emphasis at YouTube.

  6. I don’t really understand what you mean. Looking forward to the video of Hurley’s keynote and QandA though.

    I saw this new “Annotations” feature Google has added on Youtube. It let’s the video producers put in speech bubbles, description titles, credits and stuff like that. It seems to be using Flash7 or Flash9 for it somehow. Not yet for embedded and full screen modes. This to me is a clue as to how the overlay advertising is going to look like, basically some text fields overlayed on the video.

    I don’t think these overlay ads should be used on all Youtube videos, cause that would irritate users too much. It should rather be limited to the videos by the producers that activate the Video Overlay adsense for all or part of their uploaded videos. With all kinds of filters and an encouragement to video publishers to better describe the videos, better title them, use better tags and categorize them correctly, since that will improve not only searchabillity but relevancy of the overlay ads when they are activated.

    If you don’t like watching and closing those overlay ads, Google should sell you ads-free time on Youtube, it could be something like 1 dollar for each 5 hours of ads-free streaming of adsense activated Youtube content (most Youtube content will probably not have the overlay ads feature activated just as most websites on the Internet don’t use Google Adsense). This Youtube credit, Youtube users should also be able to donate any amount they want to their favorite Youtube content providers.

  7. Chad Hurley: How We Did It « NewTeeVee Friday, June 27, 2008

    [...] Q&A (note: I didn’t capture all questions and answers). See also my recap of a question about potential monetization projects that I didn’t capture on [...]

  8. ONLINE SERVICES/INTERACTIVE MEDIA « Daily Marauder Friday, June 27, 2008

    [...] products clickable within videos, says CEO Chad Hurley, speaking at a dinner in Palo Alto, Calif. (http://newteevee.com/2008/06/26/hurley-youtube-looking-for-affiliate-revenue-streams [...]

  9. Total Kroya Tech » Blog Archive » YouTube Affiliate Money Plan Sunday, June 29, 2008

    [...] NewTeeVee cited comments made by YouTube co-founder Chad Hurley about potential for making money on videos with affiliate deals. Links to Amazon and iTunes represent the early test. [...]

  10. Will Ben Ling Be Money for YouTube? « NewTeeVee Thursday, August 14, 2008

    [...] mulling over a reversal of its stand on pre-rolls and co-founder Chad Hurley has said that affiliate sales will be a big [...]

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