Google began releasing an update for YouTube on Google TV Sunday. The rollout should take several days to complete. The new features are strongly focused on making it easier for viewers to navigate channels to find video content. The tools also allow viewers to become more social by rating videos, as well as adding comments or content to playlists. Engineers at the Mountain View, Calif. company are also continuing to work on a dedicated Google+ app for Google TV, which is expected to debut soon. Social features and the ability to easily access content through connected devices -- also known as smart TVs -- drives demand on YouTube. While consumers are still awaiting high-quality content subscription services, a Google spokesperson said the company has "nothing to announce at this time." About 42 million consumers globally watch TV shows and movies from an Internet-connected television, according to research from Strategy Analytics. Indeed, adoption to Internet-connected TVs continues to grow, although slowly. Findings from a Deloitte survey of 2,215 U.S. consumers in late 2011 found that only 14% stream movie content to a computer or television as part of a paid subscription model, and only 12% can view content via an Internet-connected TV. Could Google TV apps support a subscription service? Xyologic, a search engine for app stores launched Monday, paints a picture of apps gaining in popularity and those experiencing failure. The research firm has been following apps on Google TV since August 2011. Since then, 64 exclusive apps have been added. According to the company's analysis, nearly 5 million apps have been installed, with six that come pre-installed on Google TVs. Only 352,000 Google TV exclusive Android apps have been downloaded so far. The top apps in terms of installations include Napster, Pandora, CNBC, TV & Movies, Photos, Twitter, Redux, CNNMoney, Maps, MotorTrend, and Thuuz Sports. For now, Google TV YouTube content relies on an ad-supported model. Some of the ad formats on YouTube are available on Google TV, such as pre-roll ads, but Google engineers are working to integrate the full suite of YouTube ad options, such as TrueView, an ad model that doesn't change the advertiser for the impressions unless the ad runs for more than 30 seconds. Internet-connected TVs are not the only means for accessing content. In another study released last year, Strategy Analytics found that 65% of U.S.-based weekly Xbox users under the age of 25 access online TV shows and movies from their game console, even more than from a desktop or notebook PC screen. Easy access to content could also drive advertising for Google. As consumers change the way they consume media, so will platform providers such as Google's YouTube, making a paid-subscription service seem inevitable. After all, YouTube boasts that it has logged more than 1 trillion views in 2011. Advertisers can only imagine what that might mean for a paid-subscription Internet-connected TV service. Earlier this year at the Consumer Electronics Show (CES), Louisa Shipnuck, director of marketing and strategy at Verizon Digital Media Services, said she would reconnect with Google to get more information on the content offered through its Google TV Internet-connected service. While the goal is to help viewers navigate through the channels more easily, software bugs such as the TV suddenly turning off or on continue to dampen sales of the Internet-connected device. The next version of Google TV should produce much better results than the first, according to sources, but it won't come from the hardware manufacturer Sony. The maker of PlayStation, Walkman and other electronic devices signed over bragging rights to Samsung.
In another victory for blinkx, the video search company has won the right to power AOL’s video search. “This is certainly one of our more significant distribution deals -- up there with Ask.com,” said Suranga Chandratillake, blinkx founder and CEO. Although no YouTube, AOL has grown into one of the biggest video hubs online, with about 450 million video views per month, according to comScore. Per the new deal, blinkx will also incorporate AOL’s premium videos in its own search engine. Adds Chandratillake: "in addition to the new audience reach it brings us, we now have access to all of AOL’s video content -- a significant and very high-quality library.” Based in the United Kingdom, blinkx attracts 55 million U.S. video searchers a month. Video search engine Truveo -- which AOL acquired in 2006 -- had previously powered AOL’s video search. Despite global economic concerns, blinkx recently reported that advertiser demand was as strong as ever. The company posted strong revenue growth for its fiscal first half, while pretax profits fell on costs related to a recent acquisition. Continuing to grow its audience and blue-chip brand partners, blinkx reported a revenue increase of 63% to $44.6 million during the last six months ending Sept. 30. What sets blinkx apart from its rivals? “Blinkx simply has better technology,” according to Chandratillake. Unlike Google or [Microsoft-owned] Bing, it was built from the ground up to search rich media, not text.” “Because blinkx technology understands what’s happening in the video itself -- through visual analysis and speech recognition -- we’re better able to place relevant, targeted advertising in the content,” Chandratillake added. “The more effective the ad is, the better the monetization rate is for publishers.” Last year, blinkx acquired Burst Media for $30 million. Also, it recently announced the acquisition of PVMG, an ad network and digital marketing agency, for $36 million. Per the deal, blinkx is presently integrating PVMG's advertising platform to enable the blinkx video search engine to respond to a portion of PVMG's 1.5 billion daily queries with relevant video results. With the Burst deal, blinkx hoped to bring its 35 million hours of online video and TV to Burst's network of over 157 million unique users. Video ads remain the fastest-growing online ad format, and in recent research, eMarketer has forecast that the market will be worth $5.7 billion by 2014 -- up from $1.4 million in 2010. This past year, brands such as Honda, Microsoft and Revlon booked campaigns with blinkx through various agencies, including Starcom MediaVest, Ogilvy and McCann Erickson. In other video news, AOL recently selected Yahoo’s Right Media Exchange as the platform to provide real-time access to its video inventory.
Google is accelerating its focus on building out YouTube channels for the Hispanic market through partnerships with independent and traditional media companies, such as Telemundo, and Univision. The consumer segments range from retail to automotive to consumer products to technology. The project, which began last year, supports five channels, including ClevverTV, Tutele, Nuevon and Werevertumorro. Some of the channels in Spanish have English subtitles. Media providers have begun to focus on content for bicultural Latinos in hopes of attracting a variety of demographics, including second-and-third generation Hispanics. Lopez said this year he expects the majority of online growth to come from the Latino market. "About 95% of the teen population growth online in the U.S. will be Latino," said Mark Lopez, head of U.S. Hispanic audience at Google. Last year, Google created a team led by Lopez to focus on serving the 50 million U.S. Hispanics who have about $1 trillion in spending power; 30 million are online. The focus supports content across desktops, tablets, smartphones, and TVs. Lopez said Hispanic consumers have become much more tech savvy. About 55% use search engines to research tech-related information and rely on media consumption to make decisions. Online advertising effectively drives 61% of Hispanic tech shoppers to make in-store purchases, for example. Citing Nielsen numbers, Lopez said this year streaming video should grow 23% on the Web, as well 15% on mobile. Overall, Americans spend more than 33 hours per week watching video across screens, according to Nielson. While Google could opt into a subscription-based model for Hispanic channels in the future, today the offering remains an "open, ad-supported model," Lopez said.
As we all know, Google has been a publicly traded company for many years now. So it faces the rather daunting challenge of consistently showing value and growth to its investors. But Google also has a big problem, with several contributing factors: How can it maintain its superstar stock status, or even just survive long-term? This week I’ll spell out Google’s challenges; in my next post, I’ll offer some solutions. The Problems1. Advertising is Google’s main revenue source -- by a wide margin. Yesterday, Business Insider posted a piece claiming that Google has the least diversified business online. (Here’s a graphic that demonstrates the findings from Dan Frommer of SplatF.) What the article shares is what we’ve all known for years -- the majority of Google’s revenue (90% last year) was generated from advertising. That percentage has dropped some in the past few years, but needless to say, advertising is still the cash cow for Google. For many years, with Google commanding a high percentage of the overall search traffic (most months between 60%-70% or more of total search volume), Google hasn’t had too many worries about competitors like Bing or Yahoo eating away at its slice of revenue from search ads. But unlike Microsoft, Google’s mere survival is tied to its advertising. Bing isn’t as strong in the search marketplace as it could be – but then again, it doesn’t have to be. As any financial advisor would tell you, don’t put all your financial eggs in one basket. And that advice holds true whether you’re a company or an individual. Right now, Google’s eggs are pretty much all in the advertising basket, and that’s dangerous. Just ask other one-trick-pony companies how that worked out for them. Disruptive technologies come along and force change. In business, you have to evolve – or die. 2. Enter the competition. Not only is Google challenged with having too much of its revenue tied to one product, it’s also facing a myriad of new competitors in the advertising space -- not least of which is Facebook. I’m sure back in 2005 Facebook looked like a mere diversion, and many might have felt it would go the way of MySpace. But it hasn’t. In a study from late last year, measurements from Citi Investment Research and Analysis showed that users spend more than double the time on Facebook as they do on Google sites, including Gmail. That’s somewhat to be expected given the nature of the two entities. And users are still flocking to Facebook in all age groups, which means that Facebook has expanding reach and influence. Couple that with the growing amount of time Facebook users spend on the site, and you’ve got a large captive audience. The final blow from Facebook is its attractiveness to advertisers. Unlike other forms of online advertising, including search, Facebook offers unprecedented demographic targeting for ads -- by age, gender, geographic location, likes, and even status updates. The response? A recent OnlineMediaDaily piece reported how Facebook ad growth is outpacing search advertising, with advertisers increasing Facebook advertising budgets by 109% in the fourth quarter of 2011. 3. U.S. search market begins to level off. That post also mentioned how the U.S. search advertising market may be slowing down. Search advertising has been around now for more than ten years (be it through AdWords or other platforms), and advertisers clearly understand the benefits. However, at some point, search advertising as a tactic will likely plateau. Evidence of Google’s possibly reaching this plateau came to me late last year. Each year I guest lecture at my alma mater, James Madison University, and help college students in the Google Online Marketing Challenge (GOMCHA) course with basic comprehension of Google AdWords and how to manage campaigns. Each team is given $250 free advertising dollars from Google to spend over a three-week period for a client. One of the contest rules deals with the types of companies students can recruit as clients for GOMCHA. Several years ago, students had to select a company that had NEVER used Google AdWords before, clearly showing that Google was trying to introduce AdWords to new prospective companies. However last year the rule loosened somewhat, and now students must work with companies that have not advertised on AdWords in the past six months. To me, that was a clear sign that Google understands that the U.S.-based search ad market is reaching saturation. It would be almost impossible for a student today to find a company (unless it was a new company) that had NEVER tried AdWords before. Other signs showing an imminent plateau include studies like one from eMarketer recently, showing how search ad spend compared to all online marketing spend is beginning to level while online marketing spend overall continues to grow. So those are the problems Google faces. Stay tuned for my suggestions on how to solve them.