AOL and Google announced an updated and expanded agreement, which will ensure that Google remains the default search engine for AOL users for five more years. The deal will also be instrumental in adding a new source of video content to YouTube, as AOL has agreed to distribute its videos through its online video site.
AOL users watch a good amount of video, and the company was regularly featured as one of the top ten video properties in comScore’s (s SCOR) Video Metrix; that is, it was until the measurement firm changed its methodology for counting unique viewers and viewing sessions. However, much of that content comes from distribution partners that syndicate content to AOL’s videos site.
Details of the YouTube portion of the deal are limited, so we’ve reached out to AOL for clarification. It’s not clear, for instance, if AOL will distribute its partner videos through YouTube as well, or if the deal includes only AOL original content. If it’s the latter, it will be interesting to see how much video that entails: how many AOL videos it has in its library, and how many it produces on a daily or weekly basis, as opposed to how many come from distribution agreements. If syndicated content is included, it’s not clear how distribution partners will be compensated as part of the deal, especially as many of them have deals with YouTube of their own.
We also don’t know if AOL plans to break its YouTube distribution into branded channels for different sites or video verticals, or if all videos will exist solely on a single AOL video channel. It would make more sense for AOL to focus on verticals, as it would be able to break out videos about travel, sports, entertainment and other subjects and target advertising accordingly.
Finally, the search deal includes a revenue-sharing component, which will include Google ad formats being added to AOL sites. I wonder if the revenue-share agreement also extends to the YouTube portion of the deal, and if so, which party will be selling the ads that run up against AOL videos on YouTube. If it’s AOL doing the selling, the YouTube deal could certainly bring more eyeballs to its original content, but will it come at the expense of CPMs because the videos are appearing on a site known for its UGC videos? That will be an important point, especially as AOL’s advertising revenues have been in freefall lately.
While there are certainly a lot of questions left unanswered, the YouTube deal could bring some significant volume to AOL’s video properties. We’ll update this post once we hear back from AOL and know more.
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