YouTube would be a bad move for Google.
It is bad for shareholders since it makes Google less competitive on search since it provides a disincentive to make any advances in search technology. It also may create additional legal exposure for Google in terms of click-fraud lawsuits.
It is also bad for advertisers since it dilutes the value of Google’s ad distribution network. Advertisers are the life-blood of Google’s revenue model.
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Does Google’s very economic model cause it to violate its principle to “do no evil?”
In all fairness, the same question could be asked of all automated ad distribution networks, not just Google’s Adwords program.
Looking at how the ad networks work, it seems that the more content there is on a subject (that is, the more popular or broad a keyword is), the more competition there will be for producers of that content to get noticed.
Therefore, producers will bid-up the price of an ad on that keyword. Is this the most efficient way for searchers to find relevant results?
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Bainbridge OMPG carries on an interesting exploration on the value of automated ad distribution networks to distribute ads across offline media. That is, does it make sense for advertisers to hire companies like Google, Yahoo or MSN to do their non-online media buying?
(Which brings up another question on how much media convergence is really valuable for brand advertisers -but that’ll have to wait for a different day).
The Bainbridge post talks in terms of relevancy and targeting.
Another angle to bring into the discussion is the supply of online content and the ease with which it can be created. While television channels have proliferated in the last two decades, and video content is ever finding new places to be viewed, it pales in comparison to the amount of content available on the web.
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