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Google Video Sets Stage for Next Disruption

According to Pyramid research, the Google deal to acquire YouTube appeared to be staggeringly fast. However, it is likely that Google has had its eye on YouTube for some time and is unlikely to be suffering from any buyer’s remorse. Pyramid's opinion is based upon their following assessment, which maps very nicely with my latest video vignette entitled "Mass-Market Requiem."

The acquisition of YouTube outlines a new strategic direction for Google -- the $1.65 billion price tag is an indisputable commitment to becoming THE provider of web based video services. YouTube accounts for over 47 percent of visits to video websites. Adding Google’s 11 percent share of hits to their own brand video service, the company is now in control of the lion’s share of global online video. This audience will only increase as broadband becomes the norm, as online video matures and as mobile devices develop the ability to act as seamless extensions of the Internet.

Google’s AdWords have been an immensely successful product, but advertising has always been around the periphery of online content. With YouTube, Google has the ability to make advertising an integral part of content. Perhaps these messages will be seen during pre or post video consumption, and preferably with a non-invasive method. Or, maybe they will simply be a part of the storyline.

Google potentially gets far more than a video service with YouTube -- the company also gets an active and diverse population of self-segmented consumers. While not a true social network like MySpace or Facebook, the user generated content of YouTube is intrinsically granular, with videos posted under a wide range of tagged headings and categories.

Again, for marketing and advertising purposes, this is something of a 'holy grail' in that contextual adverts can be sold to match specific keyword tags used by YouTube participants. And again, as mobile catches up, the dimension of location will also be available. Meaning, advertising targeting users by who they are (persona), what they like to view (lifestyle/interest) and where they are located (proximity).

Pyramid believes that Google is now positioned to evolve online advertising to the next level. How it will go about this is yet to be determined, but given historical precedents, it is likely to be seismic in its disruption of the prior status quo.

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