YouTube’s starting to experiment with revenue sharing for video producers, though it is not clear yet how the details of the program will shake out. Marshall at ReadWriteWeb suggests this action might “put to rest” the notion that YouTube cannot monetize content, but I think it will actually show how difficult it is to monetize even popular content. Unlike targeted pay per click advertising it’s hard to “hit” a customer with a relevant ad when they are simply surfing aimlessly for clips or watching a funny clip. True, you get some vague targeting information such as a possible few interest areas, but this is nothing like running a per click ad during a search for “Buy a sony digital camera”. The latter is a golden opportunity to strike at the point of purchasing decision, and it’s why PPC, especially at the brilliantly matched Google PPC adwords environment, works so very well.
About a month back, when YouTube started allowing you to embed videos in a web page and use adsense to monetize them I tried a small experiment setting up a new website called “Funniest Online Videos“, fovideos.com. There are adsense ads embedded around the funny clips that Google pulls from their YouTube comedy section.
After sending a few thousand people to the site using some untargeted advertising I think I made something like 35 cents from a handful of clicks. Sure, I could work hard and target better and get some organic (free) traffic to that site, but as they are starting to find in many other venues video clip advertising does not pay well at all. I’m very skeptical of this model for ads, and given the deluge of clips I think advertisers will soon see this type of advertising as a waste of money, even at the low end of the scale.