YouTube’s E-Commerce Play: Watch It, Click It, Buy It

Search engine giant Google has taken yet another step in its effort to monetize YouTube, the online video portal it acquired for US$1.65 billion about two years ago.

Now, YouTube users can click on advertisement links leading them to products offered for sale at online outlets like Apple’s iTunes store and Amazon.com.

Here’s how it works: Say you’re watching a Feist music video and get the sudden urge to own the song. Beneath the usual rate and share options, you’ll find direct links to Amazon.com and iTunes where you can purchase a download.

“People come to YouTube and are constantly looking for new things to watch,” Aaron Zamost, a YouTube spokesperson, told the E-Commerce Times. “We try to connect them with content related to the content they already watch or the content their friends send to them.”

Users will have the chance to click on advertisements for music content from EMI and Universal Music Group, as well as video game giant Electronic Arts, maker of the popular “Madden NFL” series of games for consoles such as the Xbox 360, PlayStation 3 and Nintendo Wii.

A No-Brainer

The new platform and the alliances with iTunes and Amazon.com, two of the most dominant players in the e-commerce market, are no-brainers, Michael McGuire, an analyst with Gartner, told the E-Commerce Times.

“To some degree, I was wondering why this took so long,” he said. “This is evidence that there is potential for rights holders to make money and increase the potential number of transaction triggers.”

Many popular online services, such as Internet radio station Pandora, have been employing click-to-buy advertisements for some time.

“Pandora’s been in place for a while,” McGuire noted. “I’ve heard from the folks there that they are driving some transactions. I think [YouTube’s latest ad initiative] is an important step.”

The click-to-buy ads will also give YouTube and its partners a window into user behavior.

“It will be interesting to see whether the folks going to YouTube are going there to search and discover things to buy, or whether it’s just transient entertainment,” McGuire said. “You can’t know that until you put links like this in place.”

YouTube Monetization: It’s Early

The click-to-buy ads are just the latest attempt by Google to monetize YouTube.

YouTube runs in-video ads that appear over the bottom 20 percent of the video, mostly for short videos. YouTube also has contests that challenge users to create their own advertisements using licensed content.

For example, users can download a tool that enables them to create a movie trailer for upcoming feature film releases. One such contest currently on YouTube asks fans of the bloody “Saw” series of horror flicks to create a trailer for the movie. The winner gets a trip to Los Angeles and tickets to a Lionsgate Films premier.

The question of the day is this: How well is all this stuff working for YouTube?

“It’s still very early, we think,” YouTube’s Zamost said. “Our general philosophy is constant innovation and experimentation to see what works for users, advertisers and partners. We’re happy with the results thus far, and we look forward to exploring new opportunities like click-to-buy.”

2 Comments

  • The music business executives just dont get it. I’ve made over half of my music purchases in the past year as CD’s purchased via Pandora. If it were not for Pandora, I would not have even heard of many of the artists. And now the music execs are trying to put the online service out of business with business prevention fees… The music industry is getting free marketing of their products, along with fulfillment & distribution via the Pandora’s linkage to Amazon. In my business, you have to pay others to market your product… BAM – that was the sound of another music exec shooting himself in the foot with their clueless ideas on leveraging fees that prevent business. Will the same thing happen to YouTube?

  • Well, an OK shot for the first time out. A little too intrusive and not very relevant, but a start none the less.

    There are about six or so smaller companies, like our’s (www.veeple.com), doing things that are much further along, but such is the case with technology and innovation.

    At least Google is trying to think about how to make money for the YouTube poster and themselves.

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