Commentary
4/30/2008
04:55 PM
Eric Ogren
Eric Ogren
Commentary

Google Admits Making Money With YouTube Has Been Difficult

In a candid TV interview, Google CEO Eric Schmidt said, "I don't think we've quite figured out the perfect solution of how to make money [with YouTube], and we're working on that. That's our highest priority this year." You don't say...



In a candid TV interview, Google CEO Eric Schmidt said, "I don't think we've quite figured out the perfect solution of how to make money [with YouTube], and we're working on that. That's our highest priority this year." You don't say...YouTube is an enigma of sorts. It is addictive, yet advertisers seem to be wary of it. The potential is high, but Google has yet to capitalize on it in a meaningful way. Considering the pace at which Google unleashes new products, you'd expect it to have YouTube all figured out by now. But it hasn't.

Schmidt recently sat down with CNBC and spoke about the company's plans to improve YouTube's services. In particular, Google wants to make it a better advertising tool. "We believe the best products are coming out this year. And they're new products. They're not announced," Schmidt said. Right now, there are some basic ads that appear at the bottom of videos themselves. The way YouTube is built, however, it isn't putting the ad inventory to best use. Google plans to introduce new ad campaigns that go beyond these basic in-line ads.

Schmidt went on to say that advertising campaigns would be "much more participative, much more creative ... much more interesting in and of themselves." Participatory ads, huh?

This vague bit of dialog was enough to excite investors, who sent Google's shares up more than $26 after the interview aired. Schmidt and Google need to do a lot more than talk, however, if they really want to please stockholders. While Google's purchase of YouTube back in October 2006 seemed like a no-brainer, Google has yet to do anything really interesting with the site.

Perhaps the products Google has up its sleeve will set the ball rolling in a more positive direction. Whatever Google's plans are, it's definitely time to focus on YouTube.

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