Google on the Future of Online Video

In an extremely revealing interview published this morning by The Hollywood Reporter, Google's vice president for content partnerships, David Eun, conceded to reporter Andrew Wallenstein that his company is just as mystified as the rest of the world with regard to the evolution of online media.

Despite his company having agreed to spend over one and three quarter billion dollars to acquire YouTube, Eun notes that analysts have not been able to come to a consensus over the size and breadth of the online video marketplace.

When asked a question regarding Google's being regarded as a kind of "frenemy" - a company that could become a partner and a competitor to content providers simultaneously - and whether Google's own size is part of the problem, Eun answered Wallenstein's question along with a few others he may not have asked: "I think it's because frankly we don't know exactly how the online video space is going to go," Eun said. "It's still very, very early and the entire market is, depending on which analyst you use, is a $200 million market, which is still very, very small. So because we don't have a lot of data, there's a lot of questions out there.

"At Google, we don't have a clear idea of how the market is going to shape up, but we're really certain about the things we want to do," Eun continued. "So if it seems like we know what's going to happen and maybe you don't, my theory is that there's a perceived imbalance you might feel, when in fact we have lots of questions, too."

What Eun acknowledges is that there is a wellspring of user "behaviors" surrounding online video, and what Google certainly wants to do is channel those behaviors toward processes that can be monetized. Exactly how that will be done, however, has not been decided, although the company seems willing to test several approaches and happily discard the ones that don't work. The key, Eun said, was figuring out how advertising should work for online video.

One of Google's discoveries, Eun said later in the interview, is that users not only prefer for advertising with which they're presented to be relevant, but also that it's fresh. Regardless of relevancy, user response tells Google they're tired of seeing the same ads over and over, as the company learned during a beta rollout of its first video ad inserts.

Some of Eun's comments paralleled those of AOL Video Senior Vice President Fred McIntyre to BetaNews last week at CES, especially where McIntyre said his company is partnering with Intel and others to develop tools for advertisers to conduct very detailed, granular research into audience behaviors. The objective is to determine how to channel those behaviors so that the rapidly building audience in user-generated content (UGC) that's supplied for free, can be monetized by redirecting those behaviors toward branded, professionally produced content that is not free.

"If you look in general at what's happening in the ad business globally, not just for Internet video but across the entire spectrum of media right now," McIntyre told BetaNews, "dollars are moving from other media to the Internet at an incredibly rapid rate, and at a rate that is accelerating. And the reason for that is, when marketers look at performance, at the ROI metrics that they get held accountable to by the clients, at how they can move the needle in meaningful ways - the core metrics that marketers have to worry about - the Internet performed very, very strongly."

Google's Eun told The Hollywood Reporter that one concept Google is considering is attaching relevant advertising to users uploading their UGC, "so that you can monetize the behavior instead of killing [it]."