In class we discussed how online search engines make high revenues through keyword based advertising. From the advertisers’ perspective, this form of advertising is an excellent way to ensure that their ads are viewed by users who have expressed a similar interest through their online query (word search). However, it is not always the case that a user is truly interested in viewing those ads nor is it a certainty that a user who has clicked on an ad intended to purchase the advertised product (he might have clicked on it by accident). In both of these cases, this form of advertising fails to meet the advertisers’ needs.

Yesterday, YouTube added a new feature called YouTube Insight which makes it possible for users to view detailed statistics about the videos that they upload to the site. An uploader will be able to find out where the viewers have come from, and exactly when they watched the video.

In the context of advertising as a matching market, the advertisers want to be assigned to slots which will maximize their total valuation. In class, we assumed that advertisers know the clickthrough rates associated with each slot, but we ignored the mechanism of exactly how this is possible. As the New York Times article points out, the tools provided by YouTube Insight will greatly benefit advertisers by assisting them in determining which audience groups they should target. In other words, advertisers who care how many clicks their ad will receive, can accurately match themselves with the appropriate slot.

For example, a band may upload its music performances, determine which states it was popular in via Insight, and then plan its tour around that. Similarly, marketers can upload several versions of a movie trailer, and subsequently determine which version is catching on where. Based on this information, they may choose to run the trailer as a TV ad in a particular geographic location.

Referenced Articles:

http://www.nytimes.com/2008/03/27/technology/27youtube.html?scp=2&sq=youtube&st=nyt

http://www.redherring.com/Home/24035

http://www.youtube.com/blog?entry=IRJjhiDz6RU