Google (NASDAQ: GOOG) does not appear to have made any real money from YouTube, especially given how much the company earns from its search ad business. There are not a lot of advertisements on YouTube, but Google may have come upon a plan to get dollars out of the big video-sharing site another way.
Marketers using the Google ad network will be allowed to use certain YouTube videos in messages on the network's sites. According to The New York Times : "The Internet search giant is expected to introduce a service on Tuesday to allow Web sites in its ad network to embed relevant videos from some YouTube content creators. A Web site or blog specializing in hiking, for instance, might choose to embed hiking videos from YouTube."
Google will share ad revenue with the video content creators. The program is in its earliest stages and only 100 companies are set to offer their video as part of the program. Given the millions of videos on YouTube, that figure is likely to change soon.
The idea looks good on paper and it may work in practice, but it could have drawbacks. Much of the video on YouTube even from professional companies has mediocre picture quality, and there is no guarantee that adding video to a marketing message will make it any more compelling or effective than text ads.
Beyond those issues, it is a brilliant idea if it works.
Douglas A. McIntyre is a partner at 24/7 Wall St.