Last quarter, Google executives had spoken in depth about their plans to make YouTube profitable, and focus on display advertising. During the first of the earnings conference calls held yesterday, Google CEO Eric Schmidt said that the company is “We are monetizing more than a billion video views every week on YouTube, and performance is completely in line with what we discussed last quarter. YouTube is on its path to profitability in the not-too-distant future.” Part 2 of our notes from the two earnings conference calls include comments on the display advertising, largely from Nikesh Arora, President (Global Sales Operations & Business Development), and Jonathan Rosenberg, SVP (Product Management):
— We have primarily been able to sell pretty much home page ads across the world on YouTube, to the extent that 90 percent of our US home page video YouTube inventory was sold out in the third quarter. (Nikesh)
— Added new partners and advertisers on YouTube, and further improved monetization. 90 percent of the top 50 AdAge advertisers have run campaigns on YouTube. Hewlett Packard, Palm, McDonalds used the YouTube homepage for advertising. Going to release pre-roll inventory to drive further monetization of YouTube.
— YouTube signed partnerships with Time Warner and Warner Music during Q3, and this morning a deal with Channel 4 in the U.K. was announced.
— The monetizable views have increased by over 3 times the last year. The model there is making partners money. Usage and traffic continues to be very strong, and we’re doing a good job of monetization of four activities: the homepage ads are going great, and we’ve sold out the US YouTube homepage over significant periods of time. We’re making great progress on search videos, with promoted videos on the right hand side. The watched videos with in-stream ads is doing well. We’re getting some interesting videos uploaded, and better engagement with the user community, for examle the quaker oats contest – awakening your sensing challenge.
— We’re going to show more videos on Google.com. Typically, it’s currently related to entertainment and demos. We want those format to ultimately merge with YouTube efforts from a products and sales perspective. (Jonathan)
Display & DoubleClick
— The display business, but we think it’s still a highly inefficient industry. Something like 25% of all the publishers’ ad space still goes unsold.
— Announced the new DoubleClick ad-exchange this quarter. There are contractual commitments from major partners and migrations from the original Double Click ad exchange, and over half of the largest 25 ad networks in the U.S. are already using the new ad exchange. (Nikesh) Our goal there is basically to increase the size of the pipe for everyone, advertisers, agencies, ad networks, and publishers. (Jonathan)
— Display has huge potential. Our goal is to help the overall pie grow. We’ve succeeded because we’re offering great performance to advertisers. I think significant portions of dollars are coming from offline to online.
— Top 3 hurdles for Google in Display: make it easer for advertiser to run the campaign. Got to get the demand for publisher ad inventory. Publishers are interested in forecasting, and using products like network-builder to manage their inventory. The advertisers basically want to use ad-planner to get better targeting. We launched demographic data for 10 markets in ad-planner last quarter. We’re trying to build display products both from branded and performance display side. (Jonathan)
“The way we think about acquisitions is we have historically done an acquisition, perhaps one a month or so. And those are typically small and they are typically complete an offering, they are typically technology intensive, they’re not very expensive in the scheme of things and they bring some specific technology. So in search there are a number of companies that we’ve looked at. Again, small companies that have invented some very interesting way of doing, for example, a kind of vertical search or a kind of analysis of how search should perform. In the area of advertising we’ve looked at, for example, in the display category there a number of small companies that have figured out better ways of sorting and working on display ads.” Larger businesses would have to be some significant strategic rational, and those are done one a year or one every two years. They are going to be quite infrequent.
Chrome & Chrome OS
— Placing some big, big bets on making the Web better. Have shipped a release of Chrome that’s more than double the speed of the first launch, and also launched Chrome Frame, which is an open-source plug in for IE that dramatically speeds up Java script
— Chrome OS is a materially significant achievement in platform computing. It is quite different from the current incumbents in speed, efficiency etc. It’s going as planned and we’ll more on it later this year.