What YouTube Ads Will Add To Google's Bottom Line
Silicon Alley Insider, Wednesday, August 22, 2007 12:30 PM
Henry Blodget offers a detailed analysis of the revenue contribution from the video ads on YouTube that Google announced on Tuesday. His most aggressive forecasts range from a $450 million contribution to $13 billion. (Read the blog for all the variables put against these numbers.)
YouTube's revenue won't likely be material to Google for at least a year or two and possibly more, Blodget says. What's more, the impact on the bottom line will probably be even less pronounced, he says, because serving a video ad, even for Google, is far more expensive than serving a text link. At a $20 CPM, the gross margin on such ads will likely be well below Google's current margins.
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YouTube's revenue won't likely be material to Google for at least a year or two and possibly more, Blodget says. What's more, the impact on the bottom line will probably be even less pronounced, he says, because serving a video ad, even for Google, is far more expensive than serving a text link. At a $20 CPM, the gross margin on such ads will likely be well below Google's current margins.
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