Thinking Around the Box

Far be it for me to pretend to be a tech expert. In fact, it’s a minor miracle I can spell tecnolgy technology. I can’t stop thinking, though, that it’s bizarre all these companies are being valued at astronomical amounts with almost no revenue. It’s as if I could write a business plan (everything except how it turns a profit), register a domain, stir up some press and voila...$200 million. Don’t believe me?

Facebook.com – Valued at $15 billion with an expected $150 million in revenue for 2007, their price vs. sales value is almost 100/1

Bebo.com – Just purchased by AOL for $850 million, had $20 million in 2007 revenue, 42.5 / 1 P/S ratio

Slide.com – A widget (yea, I thought it was a fictitious product from business school too) producing company used on Social Networks such as the ones listed above was valued in their Series D funding at $550 and I am not sure if they’d made any significant revenue.

What’s my point? 1.5 years ago Google purchased YouTube for 1.65 billion. At the time CEO Eric Schmidt said to their new acquisition to focus on attracting users and not on attracting revenue. Fast-forward to present day and the word that sums up the missing part of all these overvalued companies starts surfacing – MONETIZATION. As of this past October, Google / YouTube had a 31.3% market share in online video watching. Considering 75% of web users viewed a video that month, and they averaged 3.25 hours of watching in the month, this is what you might refer to as a captive audience. Still though YouTube has not found a way to successfully convert these users into dollars.

Fear not though YouTube, The Village Idiot is here to the rescue.

Picture frame ads. Sure this would require advertisers to partially redesign their online media content. But to take advantage of someone watching the day's Glumbert videos for 5-10 minutes without flipping during commercials? I think they’d find time.

How to target the ad though…there’s several ways. Google already knows every other site you’ve been to, so start with that data. Non-original content’s source can be identified and most media outlets already knows the demographics they reach. Throw this data into the equation. Lastly, using the speech recognition software Google already has for their GOOG-411 service they can build out the software to analyze original video’s content. Based on the determination of the video’s content a final data point for ad targeting is applied. An AI component can be built into this last piece to better target over time based off user clicks and engagement.

Adoption would be tough I admit, advertisers have become used to their easily measured CPC’s. Cozying up to a new measurement scheme, not so dissimilar to Slide.com’s measure of engagement, would take time. But since thinking in, or out, of the box hasn’t worked so far, perhaps it is time to see what can be found around it…