YouTube takes on TV

02 November 2011

NEW YORK: Media owners and brands are expected to increase their focus on YouTube after the launch of almost 100 channels containing original online content, which could put pressure on TV adspend.

YouTube, a unit of Google, recently unveiled details of 96 forthcoming channels from providers such as the Wall Street Journal, Thomson Reuters, Meredith and Rodale.

"For advertisers, these channels will represent a new way to engage and reach their global consumers," Robert Kyncl, YouTube's global head of content partnerships, said. "They'll be available ... on any internet-connected device, anywhere in the world."

David Cohen, an executive vice president at Universal McCann, the media network, argued that the strategy taps into brands' growing desire to deliver targeted content for different demographics.

"This is clearly the most audacious original programming initiative for the internet, and it capitalises on the trend of creating niche programming, thinking about people's passions and creating communities around them," he said.

Hearst Magazines is introducing two channels, one championing Car and Driver, Road & Track and Popular Mechanics, and the other doing the same for titles like Cosmopolitan and Marie Claire.

Kimberly Lau, Hearst Magazines' VP, business development for digital media, said that this alliance took attempts to leverage YouTube for its brands and advertising clients to a "new level".

"We're interested in bringing 360-degree programs to our advertisers interested in cross-platform," she added. "Part of the gist of this is the aim to bring TV dollars to online - and YouTube is uniquely positioned to drive that."

Anthony DiClemente, an analyst at Barclays Capital, estimated online video adspend would rise by 43%, to $2bn, in 2011. YouTube's audience of 161m visitors makes it the most popular site in the category, and means it will take $1.6bn.

"While we do not believe this is an immediate threat to studios, content providers or distributors just yet, we do believe this," DiClemente said. "The move positions Google to act as a distributor in a bid toward capturing incremental ad dollars that are traditionally directed toward TV."

Richard Greenfield, an analyst at BTIG, also warned Google's latest move builds on a trend begun by Netflix, and now incorporating big industry players like Amazon and Wal-Mart's Vudu.

"The average US household is watching over eight hours of TV per day, and when you start to layer in a wide spectrum of content from the web ... we believe traditional television and movie content, especially fresh/live content, will suffer," he said.

Data sourced from Wall Street Journal, Hollywood Reporter, ClickZ; additional content by Warc staff