An analyst working with Credit Suisse is claiming that YouTube is costing itself nearly $500 million a year. YouTube, which is owned by Google, only places banner advertisements on approximately 3% of the pages that make up the website. If they were to increase the number of pages that include web advertisements, they just might see their online advertising revenues increase dramatically.
The analyst, Spencer Wang, suggested that YouTube needs to create a standard web advertisement for their site. Once they can accommodate the additional advertisements, it will be important for YouTube to convince marketers that their site has the capability to boost sales for the products that they advertise.
Not too long ago the forecasted revenues for Google were dropped a bit and YouTube is supposedly to blame. Analysts suggest that the video website is a real weakness for Google. Wang noted that “Despite the growth of YouTube’s user base, there is little evidence to suggest Google has been able to materially monetize this usage. In light of the current ad recession, experimental budgets are being trimmed.”
Google stock has already taken a hit over the last several months. The economy is declining and revenue generated by online advertisements simply is not growing as fast as it used to. Even though the forecast for YouTube was less than optimistic, the value of Google stock grew slightly. At the moment, Google also seems to be generating a great deal of gossip over whether reports of a Twitter takeover are true or not.