YouTube's advertising model goes traditional originally appeared on BloggingStocks on Thu, 10 Jul 2008 12:45:00 EST. Please see our terms for use of feeds.

When Morgan Stanley's (NYSE: MS) veteran Internet analyst Mary Meeker estimated that overlay ads on YouTube could immediately add $4.8 billion in gross revenue and $720 million in net revenue to Google's Inc. (NASDAQ: GOOG), her one-time competitor Henry Blodget was puzzled.

Her figures were dramatically bigger than his estimate of $12 million to $360 million of gross revenue. As Blodget discusses in his Silcon Alley Insider blog, Meeker made a huge mathematical blunder. She didn't calculate her estimates using cost per thousands (CPM), the common measurement used in selling advertising. She just forgot to divide by a thousand. So instead of $4.8 billion, Meeker really meant to say $4.8 million and $720 million becomes $720,000.

These ads are insignificant to Google's bottom line.

Blodget, who is turning out to be more honest as a blogger than he was as an analyst, clearly is delighting in jabbing the Internet Queen Meeker. It's odd that no one on her team caught this mistake before it was published.

Investors need to remember that analysts often are wrong. When they guess too low, as Wall Street often has with Google, it's called an "upside surprise" and when they guess too high it's called a "disappointment." This is a game that Blodget knows very well.

Henry Blodget blasts Mary Meeker's Google (GOOG) math originally appeared on BloggingStocks on Fri, 24 Aug 2007 09:25:00 EST. Please see our terms for use of feeds.

According to a report at TechCrunch, Google Inc. (NASDAQ: GOOG) is working on programs that will drive adoption of video advertising online. CPMs, the rate that advertisers charge customers, are estimated to be over $40 for online video. This is much higher than the rate for simple banners.

Google obviously has an edge, if it can come up with a program that both advertisers and content companies will accept. Due to its ownership of YouTube and Google Video, the company has the largest audience for video content. What it still lacks is a broadly accepted program to move TV advertising to the web.

One of the issues facing Google and competitors is whether people are willing to watch ads that are much longer than 10 or 15 seconds. Longer ads clearly offer a better opportunity to explain product features, but if web visitors will not take the time, it does not matter.

The other substantial problem is where the ads go. Do they belong in the programming or in some other spot on the web page.

With display advertising growth rates slowing and text search ads reaching a level where their year-over-year numbers are likely to be less robust, the battle for internet revenue may well turn to video.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Google continues push into video ads originally appeared on BloggingStocks on Sat, 07 Jul 2007 11:40:00 EST. Please see our terms for use of feeds.

The knock against Google is that its ad business is mostly text-based. Then again, it is a highly lucrative business - that others like Microsoft and Yahoo wish they could excel at.

However, Google realizes that, in order to continue its growth, the company needs to bring on board more mainstream advertisers. This means going away from text ads - and venturing into branding.

It's not an easy transition.  But this week, Google is making a big step in that direction. That is, in its AdSense program, there will now be video ads.

But there is an interesting twist. The ads will not play automatically; that is, the user must click on the ad.  Hence, it is "click and play" advertising.

I talked to Greg Sterling (who, by the way, got back to me at 11pm tonight), who is the founding principal of Sterling Market Intelligence, a consulting and research firm focused on online consumer and advertiser behavior.  His assessment so far:  "I haven't seen the ads in action so I can only comment in the abstract about the model. But it combines reach and performance-based targeting for video in ways that are going to be appealing to brand advertisers."

While Yahoo! certainly has had much more experience in branding ads, the company may be a bit too traditional in its approaches. Here, in the case of Google, it is offering a unique method to video advertising.  And it is leveraging its incredible AdSense technology that has already proven to be quite successful.

Links:

My interview with Greg Sterling

Greg Sterling - Blog Post

Google: new video ads likely to hit big originally appeared on BloggingStocks on Tue, 23 May 2006 09:30:00 EST. Please see our terms for use of feeds.