As it turns out, revenue from YouTube ads has come up short this year – they will likely total about $200 million end of year, sources told the paper. The trouble is understandable: what blue-chip advertiser would want their brand popping up next to amateurish middle-school skits or, gasp, content that’s on the “mature” side? Another issue: copyright litigation. (Viacom sued Google last year).
Aside from aesthetic and legalistic concerns, the process of actually selling ads on YouTube is laughably complex. Advertisers are faced with as many as three legal contracts; before deals can be hammered out, YouTube’s sales team has to get the OK from a temp in California; Google staffers are forced to tally some ad bills by hand because of YouTube’s superannuated billing system, the paper writes.
In total, 105 ad sales problems have been identified by Tim Armstrong, Google’s advertising and commerce chief in North America, who has dubbed the task of solving YouTube’s ad problem Project Spaghetti.
YouTube, for its part, wants nothing to do with Google’s plan to move beyond search-engine advertising. Google is aiming to sell more video and display ads on YouTube – in addition to busting into the TV and radio markets, the Journal reports. And expanding beyond search is essential for the Internet goliath – while it’s still the king of the Net, its ad-sales growth is slowing.
Google acquired YouTube in 2006 for $1.7 billion.