Wednesday, February 6, 2013

YouTube's Amazon Strategy

More often than not, I will see this "Skip Ad" icon  pop up when I am browsing YouTube, if I even see an ad at all.  Quite different from the 120-second commerical breaks on many of the network TV video sites.  Seriously ...  I tried watching a much-hyped recent episode of the Jimmy Kimmel show on ABC's online video portal.  Within minutes of being told that the show would be presented "with limited commercial interruption", a commerical break of four consecutive 30-second commercials interrupted the action; an eternity when viewing in lean-forward mode on a small screen.

Seems You Tube is going the route of Amazon, forgoing profits and easy money in exchange for customer growth and loyalty.  They are running lots of ads, but the sheer volume of content and traffic on YouTube dilutes the impact, resulting in a very pleasant, and addictive viewing experience.  No company has been as successful as Amazon with this approach.  As reported in the Times last week,  "Amazon has had plenty of opportunities to raise its margins in the past, but instead routinely has chosen to reward its customers."

Certainly Google doesn't have the unique "profits will come later" flexibilty Amazon enjoys with the markets, so we will see.  They also haven't been chained to enormous content production budgets like the networks, but that is also changing quickly.