Product placement has been a mainstay of movies and television shows for years now. But with some content creators utilizing the method to make money from sponsorship deals, YouTube isn’t too happy at being left out of the money-making loop.
The YouTube Profit Conundrum
YouTube’s continuing effort to make money is a recurring theme seemingly every week. Despite this, the site is still expected to make a loss for its owner Google this year. Although revenues are up, so are operating expenses, leading to a possible $471 million this year. It’s a good job that Google is so monetary-wealthy that a loss of that size is almost meaningless.
However, Google isn’t going to idly sit back and watch YouTube continue to lose money, especially as the traffic coming to the site on a monthly basis indicates it should be making a healthy profit. Hence the trialling of new advertising methods, the changes in content strategy, and an unwillingness to bow to the profit-sharing demands of record labels and associated organizations.
The Problem Of Product Placement
Recently, according to MediaWeek, YouTube has started to crack down on what it feels is another threat to its money-making efforts – content partners doing product placement deals. Selected video creators have been sent menacing letters pointing out this goes against YouTube’s Terms of Service.
The use of in-video product placement, which could be anything from a brand logo on show for the whole video to someone casually name dropping a particular product, has started to seep into the world of online video. The content creators make money from new sponsors, and the brand gets publicity on the most-watched viral videos.
Taking Steps
There are also a number of new startups which specialize in connecting content creators with advertisers eager to see their products or brands placed in videos. The problem is that through all this, YouTube doesn’t see a penny of the profit, despite it providing the bandwidth and platform for this business to be possible.
At the very least, YouTube seems to be actively choosing not to promote videos with product placements in that haven’t been pre-permitted. But in some cases, it is also now emailing content creators to remind them of the ToS and asking they work withing the framework of overlay ads and the like in order to make revenue.
Conclusions
is perfectly right to take this stand because it needs to be profitable in order to exist, and that isn’t going to happen all the while content creators are making money without permission and without cutting the site in on the deal. Especially since advertisers who purchase overlay ads won’t necessarily be happy to see their competitor’s brand given a higher billing by being featured within one of the videos.
YouTube sources stated that the company “will soon announce a new formalized process for branded integration videos.” Until then it looks as though video producers are going to have to stick to the rules or risk having their content removed from the site.
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– Product Placement & Brand Strategy in the Entertainment Business.
