People have been commenting like “OHH MY GOD THE BUBBLE IS STARTED AGAIN” and “Why would Google buy the site when they already run AdSense”
Ok its not rocket science let me explain…
Yes, YouTube currently does run AdSense which actually tells Google exactly what kind of income they are making. The thing is Google is only getting between 10-20% of the revenue based on there revshare agreement with Youtube.
Did you forget that more then 85% of Googles TOTAL Profit comes from Adsense? Did you also forget that the Yahoo Publisher Network, Microsoft and eBay (to name the biggest) have just launched (or are about to launch depending on your location) rivals to Googles AdSense contextual Advertising Product?
Earlier this year Google Signed a 900 million dollar deal to advertise on MySpace and other Fox properties like IGN. Now the last time I checked there was no AdSense on Google Video. If Google BUYS YouTube for 1-2 Billion then re-brands it under YouTube (which I was told is the plan) then they will be doing several things which make so much sense to me anyway:
- Merging to form the biggest video network – Does there really need to be anything said about this?
- Land-grab for publisher space – Both Microsoft and Yahoo are trying to get a foothold in contextual advertising market but without the brand recognition and volume of traffic of the largest sites on the internet it will make it more difficult.
- Block out Microsoft – This move is a total IN YOUR FACE to Microsoft, which currently has a 600 million dollar offer on the table to YouTube for Advertising.
- Making the 800 LB Gorilla even bigger – Adsense is thier bread and butter. Why not make it grow.
- Gotta spend it somewhere – Google HAS to spend money on stuff they cant sit on HUGE amounts of capitol or the stock holders will get pissy right quick and want a dividend. They have run out of web based Microsoft products to buy =P
- Why rent when you can own – Ok really… is 1.6 or 2 BILLION dollars that much? Especially when your dishing out 900 Million renting ad space on a site. Why not buy it and call it your own.
- Already have the data – YouTube Already runs AdSense so Google can currently see the statistics on revenues.
- Bandwidth is not a issue – Supposedly YouTubes biggest expense is bandwidth. Google has 10x more bandwidth on idle then YouTube will ever need and they are already paying for that.
- Legal issues are not issues – Cmon your talking about the company that scans library books and puts them online… AND GETS AWAY WITH IT
- Google needs to stick to what it knows – Google has bought so much crap that has been a complete money sink. The one thing they know makes them TONS of money is places users go where they can throw ads in there face. This works.