YouTube to Power New Media Businesses of the Future? Maybe.

Life is good at YouTube. It’s already the largest video network globally and the second largest search engine — and with over half of content marketers migrating an increasing share of their $40b+ budgets to video in 2013, YouTube is now uniquely positioned to become the go-to platform for building sustainable media businesses of the future. But it’s not in the bag just yet — this is at least the fourth major social platform that has tried to capture brand mindshare in the last few years.

Owning audiences vs. renting them, the ability to monetize within the network, and access to deep data are key concerns making brands skeptical of the bottom line impact of these networks, and rightfully so. Brands aren’t diving in head first anymore, they’re dipping their toes — and rising expectations on ROI weigh heavily on the psyche of key decision makers. Yet, at the same time, brands are producing and distributing content more than ever before — essentially becoming modern media businesses themselves. Across the board, these companies are maturing in their understanding of social tools and platforms, and YouTube needs to solidify its dominance by providing assets that build brand trust and platform loyalty for itself.

To this end, we’re seeing YouTube engage in many efforts to re-invent itself as a destination for premium content (including, but not limited to, its funded channel experiment) and focus on key pieces of missing infrastructure will ultimately determine the success of the media businesses built upon the platform in the years ahead.

Most under scrutiny in the YouTube ecosystem is the missing infrastructure when it comes to moving “one and done” viewers further down the funnel, into lifetime value generating loyalists. (Full disclosure: FanBridge is in this business.) In the digital media world, audience retention is analogous to churn for SaaS businesses — the most import metric when it comes to building a sustainable model. Note: YouTube’s recent very public focus on “watch time” as a key metric across the board. As an example of the retention problem, the mass interest surrounding Super Bowl advertising comes to mind, when YouTube becomes a surrogate for the live experience and the default “instant replay” source for fans flocking to check out the creative prowess of top-tier advertisers.

Certainly an exciting event (and major viewing success), but what happens three days later? 30 days? The vast majority of this audience navigates away from the content experience, highlighting an incredibly short shelf life, and leaving an enormous amount of value on the table as the event becomes a memory vs. the start of a fan relationship. This phenomenon is not uncommon. Many content opportunities such as the Super Bowl, fashion shows and other tent-pole programming events could vastly increase their inherent value by factoring into the content marketing strategy ways of extending engagement before and after the event itself.

This is where networks like Facebook offer more robust toolsets and analytics when it comes to audience communication and retention; however, those networks fall short on YouTube’s secret weapon — content SEO integrated into the world’s largest search engine. YouTube is already rapidly iterating both internally and via partners on platforms and tools for brands to address the audience development and retention black hole in the platform. With those improvements, combined with the SEO-driven content discovery advantage, YouTube could provide acquisition/engagement/retention funnel dashboards that blow other networks out of the water.

Another area of the YouTube experience that needs infrastructure to support future media businesses is the ability to reach deeper levels of content activation beyond just watching video. Viewer activities like voting, sharing, Q&A, structured video responses, moderated commenting, crowd-creation and more represent a major advantage over traditional media environments like broadcast television. They also expand available data to build deeper audience profiles as well as higher performance, 360-ad packages and sponsorships that go beyond the existing pre-roll world. This extension of the audience experience can also provide a framework for building proof points of what truly is “premium” content that mass advertisers look for, as they have traditionally shied away from buying digital in favor of the “nobody gets fired for buying IBM” mentality drilled into media buyers.

From a macro perspective, much of the opportunity around interactivity is also tied to the broader needs for personalization that are multi-channel and multi-device. Existing advantages in YouTube’s favor here include the opportunity to form deeper integrations across the Google product stack (i.e. Google+, Hangouts, Google Wallet, Wildfire, Android, etc.). In this regard, Google can kill many birds with one stone. It’s able to leverage existing technology to build a more cohesive, personalized experience within YouTube. This provides more fertile ground for media businesses while simultaneously piggybacking off the momentum around YouTube to drive consumer and brand adoption to a broader swathe of the Google platform, specifically areas that need mass adoption.

With Google’s footprint across software and hardware, and forthcoming expansions in areas like Google Fiber and Google TV, there is a big end-to-end advantage here that few others can match. Moreover, this infrastructure would support the rise of related marketplaces — such as the extension of Google’s Ad Creation Marketplace to enable brands to tap into a larger content supply as they grow. A massive supply of content creators plus a huge list of advertisers create a significant (and highly defensible) barrier to entry for alternatives vying for the mindshare of media businesses. With such an infrastructure in place, Google would offer an unparalleled engine for building sustainable media businesses upon YouTube.

As co-founder & CEO of FanBridge, Spencer is responsible for overseeing the development and fulfillment of the strategic vision of the company. Since its initial venture funding in 2009, FanBridge has successfully built up a global client roster across music, sports, media and entertainment reaching over 650 million fans. Mr. Richardson is a graduate of the Leonard N. Stern School of Business at New York University.


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