This morning I woke up to learn that Google made the news public: it was going to combine YouTube with AdSense, basically. I said this was a positive step, especially when you consider that online video advertising is increasingly a considerable part of marketers online mix.
A few people disagreed with my jubilation… I was caught in meetings all day so let me add context:
Back in 2000, I was sitting in (one of the first meta search engines online) Mamma’s boardroom and we were deciding whether or not to keep sponsored, paid ads within the organic results area or removing them and putting them alongside the organic results.
The marketing purists thought that mixing church and state was utter blasphemy; while the sales guys wanted the text ads to intertwine with the organic, legitimate results.
As the IR guy trying to maximize the value of the company, I felt that the short and long term damage to Mamma would be too large by not separating the ads from the organic results, but we all recognized that doing so would hit earnings.
In other words, we knew serving paid ads somewhere on the results page made sense, but we didn’t know precisely where. Mainly, we also knew that most people would think it was tasteless…
Ultimately, slowly but surely the marketing folks won, we could not in clear conscience mix the two, so the ads went alongside the content.
At the time, GoTo.com was a pure pay-per-click engine, but nobody went to GoTo.com. Mamma was one of the few destination sites (only one?) that was experimenting with paid ads alongside and inside organic results. We had no clue what the right answer was, but we knew that text ads could prove wildly profitable.
At the time, Mamma had 4M unique users and was larger than Google. It also was doing $18M per annum in yearly revenues. Google was a non-issue, frankly, from a business perspective. From a technology standpoint, everyone knew it had the best relevancy.
That was 2000. The next year, the market imploded. CPM-priced banner/display ads dried up, CPC-priced text links gathered steam.
In the subsequent years, more and more search engines began to mimic GoTo.com and Mamma and serve paid text ads alongside and overtook those pioneers, none more so than Google.
The little lesson in this story is today’s decision by Google to leverage Ad Sense to grow YouTube is probably akin to the decisions in the boardroom… it’s a small step, an asterix, no one cares, frankly… but it was, and today’s decision will be, a necessary one for the Web to evolve into what I (and many others) think will be the platform of all media, marketing and content.
The reason why this decision is long overdue is simple: for the Web to really take off, we need to break through TV’s Maginot Line. And trust me, its defenses are as vulnerable as the French line of defense during World War I. It won’t take much, but it will take something.
Everything about TV is inefficient: from conception of content, to casting, to production, distribution, and yes, to advertising and sales in general. The Web offers a promise to bring some much needed order and efficiency.
History repeats itself: exactly what happened to print will happen to TV, the Web is more efficient. By connecting the massive monetization ecosystem that is Ad Sense (and the unparalleled reach), Google just did its part to take online video from concept one step closer to reality.
Today, two months after learning about it, I looked at the big picture. Two months ago, I reacted much the same way most bloggers did. On August 19th, I emailed my contact and blasted YouTube/Google for not doing enough… today with some hindsight, I think it’s a small step towards something potentially much, much larger.
But any way you dice it, Google just bought a call option on the $75B online advertising market.
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