YouTube says it’s where the action is …

Punch line: YouTube hopes to gain a greater share of online advertising spend. Yet, only 1% of ad spend is on online video vs. 38% for TV ads. YouTube bets that its global and local reach is an targeted advantage for this media outlet. So will large CPG firms (e.g., P&G) pump more dollars into YouTube?

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Excerpted from http://www.business-standard.com, “YouTube makes the case that it helps build brands

Despite online video and commercial-skipping DVRs, companies still spend 38% of their advertising budgets on television ads and just 1% on online video. YouTube is trying to change that.

In a bid to lure TV ad dollars, YouTube is making the case to brands that online video is the best way to reach customers …

“We would love YouTube to be a much larger part of brands’ advertising budget and mix in the next year and the future than it is today,” said Lucas Watson, YouTube’s vice president of online video global sales.

… It now says it has 800 million unique viewers worldwide a month. Analysts estimate that YouTube contributes more than $1 billion to Google’s annual ad revenue and is most likely profitable.

But YouTube, now six years old, is still in the early stages of making money. Advertisers spend just $2.2 billion on all online video ads, compared with $60.5 billion on television ads …. ad agencies are only now hiring people with expertise in online video …

YouTube has to recruit new kinds of advertisers, beyond the music, entertainment and technology companies that have flocked to the site, and convince them that YouTube is a fruitful place for brand building …

Unlike television, YouTube incorporates social elements by inviting viewers to choose whether they watch, share or create their own videos about advertisers’ products.

YouTube has both global reach and the ability to target an ad to 20-something men who live near a pizza shop …

Even though YouTube is showing more professional videos so brands can avoid appearing next to unsavory homemade videos, advertisers still hesitate to spend as much on YouTube as they do on TV …

Edit by KJM.

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