The quick win for online video advertising is the generous boost it receives as a category--from the large dollar amount paid to the Google brand. As the largest acquisition ever made by Google, it brings the significance of online video front and center and gives the industry a lot of good buzz. This is a classic case of a rising tide lifting all boats.
This is a major wake-up call to traditional TV advertisers that there is BIG money in online video and that advertising will play a huge part in its success. As Google has invaded both radio and print, this may very well be its entrance into the television model. However, instead of working within the established distribution channels, it is creating its own proprietary channel and will be able to dictate the laws that govern it.
The perception of online video has been weighed down by YouTube's reputation for illegal videos, questionable content and homemade videos of random people doing idiotic things. Now, with the Google brand, that perception is well on its way to changing. If Google can continue to address the copyright issues (YouTube had already made significant progress with most of the major media providers on the copyright front) and improve the indexing, searchability and necessary filters, advertisers will begin to feel comfortable that their messages won't be tarnished.
Google's mission statement: "to organize the world's information and make it universally accessible and useful." Google is really, really good at search. But in order to provide good search tools, it needs a significant supply of material to search. Google builds its algorithms to improve searching with more data to search. But Google Video just wasn't giving it enough to work with.
So the YouTube acquisition gives Google access to the mother lode of online video, and I think we can all expect to see vastly improved video search now. Improved video search helps the industry by driving traffic and enhancing the user experience. Advertisers can benefit as well from the development of real-time contextual ad placements. To many, this is the holy grail, but it is certainly not perfected yet. Whether it's incorporating metadata, speech or image recognition or another method altogether, the ability to match a targeted video ad with a relevant piece of content is extremely valuable. The next step would be to analayze segments of content within a single long-form clip and then insert ads near those targeted portions.
Google is very good at providing a robust tool set for advertisers to auto-bid on ad inventory. These tools are very useful for "direct response" advertisers. But they're not as proven for traditional "branding" campaigns. Traditional brand marketers account for the majority of ad budgets--and those budgets are moving online in droves. According to Advertising.com, the biggest growth in online advertisers is coming from brand-focused advertisers (32% in 2006, up from 26.5% in 2005).
Brand marketers are more sensitive to their brand image and require more human (salesperson) interaction and customized packages. The Google "machine" for direct response works very well for advertisers who are trying to spend $1 and make $2. While the nature of their sales process may change, it is certainly a shift from their proven model.
So whatever else you may hear about the Google/YouTube deal, it's a big win for the online video advertising industry. It brings credibility, searchability and access. Although it's not as clear-cut yet for brand marketers, the deal will start to clean up the perception of the online video space, which will go a long way toward raising advertisers' comfort levels.