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With Google’s (NASDAQ:GOOG) announcement last week that it would begin showing sponsored results for video searches on YouTube, a lot of advertisers and producers have begun to consider a new opportunity to tap into the web’s largest pool of online videos and viewers.

YouTube has long been acknowledged as the far-and-away frontrunner in online video, with close to 63 million US-based visitors in October 2008, according to Compete. Less well-known has been YouTube’s status as a top-ranking search engine.

Last month, YouTube served nearly 770 million search queries, making it the third largest search engine, according to Compete’s October Search Market Share.

The graph above shows the twelve month trend for video search queries on YouTube. Some key points:

  • Queries at YouTube have grown 35% since October 2007
  • The average unique visitor to YouTube conducted 12 searches in October 2008 (770M queries/63M UV)
  • By comparison, video search specialists Blinkx.com and Truveo.com each had less than 2 million unique visitors last month

With that kind of query volume, there is clearly an opportunity for advertisers to tap into the search intent of millions of YouTube searchers. Advertisers can target their videos to searchers who are expressly interested in their brand, product or category.

For instance, a YouTube search for “James Bond” returned sponsored results for the new “Quantum of Solace” game from Activision. It also returned a sponsored video for a rival game from Electronic Arts, showing the need for advertisers to play defensively.

Until now, YouTube advertisers have chosen from a variety of banner, rich media and in-video advertising formats, priced on a CPM-basis. Now they may benefit from the pay-per-click system where, like Google AdWords, keyword prices will be set by auction and advertisers will only pay when a sponsored video gets clicked.

There’s also the opportunity for advertisers to target segments on YouTube that aren’t specifically searching for an advertiser’s offering. To continue with the Bond example, a potential ticket buyer may also be searching for the Aston Martin DBS, the official Bond car, or Alicia Keyes, who performed the movie’s theme song.

So what exactly are YouTube’s visitors looking for? Compete’s monthly compilation of the top searches made on YouTube provides unparalleled access into consumer search patterns on the site and offers advertisers a tool for aligning their messaging with user intent. From the list below of the Top 40 YouTube search terms in October, it’s clear that music videos are highly searched for on the site.

Source: YouTube Ranks as Third Largest Search Engine