BusinessWeek reports Google is finding it harder to make money from YouTube than they expected:
Video ads on YouTube, though, do not yet lend themselves to easy automation. They're also more expensive and still primarily the province of big-name advertisers. Selling to them nearly always requires the participation of an ad agency and calls for more labor-intensive sales methods. There are high-level concerns inside Google that the excitement around YouTube—which continues to increase its share of the Web video universe—isn't readily translating into sales and ad dollars.
"It takes longer to bring in a YouTube dollar than it does to bring in a search dollar," concedes Tim Armstrong, Google's top U.S. ad-sales executive. "Can you make [that process] more efficient? We think "yes.'" He adds: "If you talked to me" about this in early '08, "I'd have been more anxious. But we're making nice progress."
Others wonder. The most successful ad format for Web video sites has been display ads that run near video clips, says Dave Morgan, founder of ad network Tacoda, which placed ads on YouTube before the Google deal. "No one is able to sell [these] display ads well in an automated way," he says. "It requires a human sales force."
Of course, Google and YouTube have a massive human sales force. And, like all big online players, Google has invested serious time and dollars (the $3.1 billion DoubleClick deal, for instance) in beefing up its display-ad capabilities.