CHAPTER 1 CASE

GOOGLE AND THE YOUTUBE ACQUISITION
An exercise in developing the understanding of basic concepts of Marketing from the first chapter of the text Marketing by Grewal and Levy for the course Marketing 301.002 at the University of Baltimore. Mark Anderson Student ID: ID26YC05 February, 3, 2011

This is extremely beneficial to people in the entertainment world.5. YouTube has had problems with copy right issues with the content owners as expressed in the case. Advertisers look for value because they are directly looking at the relationship of benefits to cost due to their monetary exchange for advertising space on YouTube s website. More people seem to be on the move and looking for something other . and turn it into lemonade by making use of a fingerprinting system Google has develop. The best orientation that describes YouTube is that of Value-based Marketing. and advertisers who look to buy positions on the site to market their products and services to those who watch the videos. One of the easiest ways to describe Google s mind set of acquiring YouTube is relating it to the cliché taking lemons and making lemonade. giving them an inexpensive way to display their material to a vast audience. 6 This is valuable information and information is one of the keys to success for any business. are Production. those who upload videos and watch them. 3 Both of these concepts are found in the YouTube model. Which features create the most value for both users and advertisers? The value created for the user is basically entertainment. YouTube has a unique position where as it has two types of customers. Google and the YouTube Acquisition.5. in the text Marketing 2nd edition by Grewal and Levy. Viacom.7 3. such as musicians and actors. 1 There are two concepts that are associated with Value-based Marketing and they are the concepts of Value and Value co-creation. This entertainment consists of users being able to view a wide variety of content for free. 4 Most recently and possibly the most public company. or what you get for what you give. even sued YouTube for $ 1 billion in early 2007. allow advertisers to feel more secure in advertising on YouTube and allow YouTube to share some of its profits with the copyright holders.1 1. 2 And Value co-creation is to allow (customers) the opportunity to act as collaborators in creating the product or service. Giving control of what material the copyright holders want to allow or disallow stops the unwanted lawsuits. What was Google hoping to achieve by acquiring YouTube? Basically Google is hoping to achieve more profits from the acquisition of YouTube. the lemon. As well it gives the user the ability to upload their videos. a definite form of value co-creation. Value is the relationship of benefits to cost. This in turn would relieve YouTube of the financial problems of lawsuits. The content identification system allows copyright owners to see where and how often their material is viewed. Copyright owners could tag and track their content on YouTube. Sales. 5 So why would Google want to buy this lemon? Because Google hopes to take the copyright issues. Value-based Marketing is defined as the attempt to discover and satisfy their customers needs and wants. 2. According to the break down in Exhibit 1. which of the four orientations best describes YouTube? The four orientations described in exhibit 1. However the way Google hopes to achieve these profits may be considered novel as well as revolutionary. Marketing and Value-based Marketing. because it is an inexpensive way of reaching a huge audience.

8 Massive may be an understatement since YouTube is the fourth largest website on the internet. and those that are usually only receive local programing. Unfortunately. or a combination of these factors. up-load. both users and content providers are limited by hardware. By creating a channel. How can advertisers maximize the potential YouTube offers? After viewing YouTube and some of its features advertisers may wonder how to maximize the potential YouTube offers. Users and content providers can access. Secondly.2 thanthe typical TV entertainment media. Create a Home on YouTube and Build a Loyal Audience are two main concepts that I found in my research. YouTube has the platform to give the consumer what they are looking for. which in turn allows them to record. iPods. Creating a Home is achieved by creating what is called a channel. which in turn constricts the selection available dramatically for the user. YouTube offers mobility to its users and providers. This seems to be .9 4. such as television. search. However most content providers do have cameras on their phones. these videos can be accessed by hundreds of millions of people. YouTube can be accessed 24 hours a day 7 days a week. however they do seem to be logical and informative. has over 455 million users. All you need is an internet connection and you are in. I will say that these ideas have not been tested by me personally and I fully may not understand some of these concepts. Being a novice in this area. With traditional media types such as TV. Content providers do not all have traditional hardware such as video cameras and editing software to record movies and then distribute their content to massive audiences. movies and DVDs. Once uploaded. All of YouTube s material can be accessed at any time. I was not sure how to do this. and most smart phones. and DVDs? Explain your answer in terms of benefits. Visit the YouTube Web site and try some of its features. Channels create a destination for users/viewers on YouTube. Try getting a video out to just 10.000 people the traditional way! Unless you have deep pockets and an American Express Black card it s just not going to happen. view and upload videos via laptops. how does YouTube compare with traditional channels. movies. 24 hours a day but not every program may be accessed when you want to view it. as of yet. the advertiser can customize it so that it represents their intended goals and their individual companies. TV s are not that mobile. 5. desktops. What YouTube gives advertisers is massive reach and massive audience. said Barry Salzman. selection and transportation. reduced costs. YouTube creates increditable value for its users and content providers in a more non-traditional way than that of television. The value created for the advertisers is tremendous. edit and reach a huge audience on the internet. movies and DVDs. given you have cable and a TV. The first benefit is that of convenience. By creating a destination the owners of these channels can drive traffic to their specific areas and attract subscribers. Traditional TV can usually be accessed. In terms of creating value for its users and content providers. however after some research I found some information on how to target an audience on YouTube. managing director of media and platforms for the Americas at Google. has more than 2 billion videos viewed per day and is the 2nd largest search engine only to Google itself.

It s about reaching as many people as possible and as diverse as possible. this is not something Bridgestone wants their product to be associated with.3 very similar to having your on cable channel where the advertiser/ channel owner is in control of what programs/videos are incorporated and what advertisements are displayed. . What risks do advertisers face if they choose to use YouTube? The biggest risk that advertisers face if they choose YouTube is having their ad mismatched with the video that the user may be watching. Many companies want to portray a certain image with their product. YouTube may not be able to provide the security to insure that a company s image will be protected at all times.10 6.11 Obviously. An example of this could be a video showing cars sliding on ice and crashing into each other and then a banner as pops up for Bridgestone tires. YouTube is about freedom for its viewers and this freedom if controlled by the advertisers would deviate from the original model YouTube has tried to establish from the beginning. their company or both. Target markets do not seem as important to YouTube as it does to some advertisers. YouTube is about quantity. Build a Loyal Audience involves updating the content on your channel to keep the subscribers that you have and to increase subscriptions to your channel.

Marketing.maximumpc.4 NOTES 1. Bloomberg. Brian.businessweek. Marketing. Web.com/YouTube-Too-rough-for-advertisers/2100-1024_3-6063536. 2 Nov. 2011.html 10. 3 May 2010. Re: YouTube: Too rough for advertisers? CNET News. http://www.com/article/news/google_hoping_profit_youtubes_copyright_issues 6 Salisbury. This case was written by Colin Fox in conjunction with the textbook authors (Dhruv Grewal and Michael Levy) as the basis of class discussion rather than to illistrate either effective or ineffective marketing practice.com/article/news/google_hoping_profit_youtubes_copyright_issues 7. http://news.google. 2009 http://www. Re: YouTube: Too rough for advertisers? CNET News.html 8. Sandoval. 2011. New York: McGraw-Hill. Grewal and Levy. Maximum PC. Bart. Maximum PC.com/ads/youtube/ 9. YouTube. http://www. YouTube.com/YouTube-Too-rough-for-advertisers/2100-1024_3-6063536. New York: McGraw-Hill. 5. Marketing. Grewal and Levy. http://www. http://www. Sandoval. Print 4. Re: What does YouTube offer to Advertisers? YouTube.maximumpc.cnet.html .com/news/2010-05-03/google-s-youtube-boosts-displayadvertisers-10-fold-update1-. Re: Google Hoping to Profit from YouTube s Copyright Issues. New York: McGraw-Hill. 2009. 2011.com/ads/youtube/ 11.google. Re: Google Hoping to Profit from YouTube s Copyright Issues. Greg.cnet. Salisbury. http://news. Greg. Web. Womack. 2 Nov. Print 2. Re: Google s YouTube Increases Display Advertisers 10-Fold. Grewal and Levy. 21 April 2006. Bart. Re: What does YouTube offer to Advertisers? YouTube. 21 April 2006. Print 3.

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