Whose Shares Wins? ITV vs Google

See Decipher discuss the Susan Boyle case on Channel 4 news here

Much was made in the press about ITV not earning any revenue from all the people watching the clip of Susan Boyle on Britain’s Got Talent on YouTube.  This has been described by various commentators as a missed revenue opportunity, and a commercial failure for ITV.  This completely misses the point.  Over 50 million people tuned into watch the Susan Boyle clip on YouTube.  It was the best two minute ad for a TV programme that has ever been distributed and ITV didn’t pay a penny for the privilege.  You have to ask how many posters a TV company would have to buy to get an equivalent, media impact.  The only statistic of interest should have been the uplift in audience, from the episode before to the episode after the YouTube explosion of Miss Boyles version of Les Miserables. There was a 2 million uplift.

There has been a bizarre implication in all the media coverage over the last two weeks, that because of this example, YouTube is somehow a 21st century business and that ITV is an old fashioned business that doesn’t get it.  ITV maybe sitting in the middle of firestorm of reduced ad spend, but at least advertisers are spending with it.  They are barely spending with YouTube, which costs Google the best part of a billion dollars a year to run, but makes it only 200 million dollars in return.  It is one of the last of the dot.com absurdities – a great functionality in search of a business model.

The press commentators declared that ITV’s shareholders were funding content that YouTube were exploiting to build a business and that they should be up in arms about it.  But this perspective was not based on a sensible analysis of commercial outcomes.  If you look at the issue from a revenue gained point of view, the only shareholders who should be up in arms are Google’s.  Their expensive acquisition, YouTube,  distributed an amazing two minute advert for Britain’s Got Talent from ITV for free on their platform.  For Google or YouTube to get the equivalent value out of ITV you would have to pay them millions pounds.

YouTube is the best thing that has happened to the TV industry in the last 20 years.  The idea that people are tuning into the UGC site, rather than watching TV is preposterous.  There is just no evidence that it is happening.  Consumers get the idea of relative value between them. YouTube is a clip sampling destination, not a TV destination.

More importantly brands understand the relative value. T-Mobile the brand behind another recent YouTube hit  – the Liverpool Street Station dance scene –  quite clearly understand the comparative value exchange at work here.  When they wanted to launch their follow on campaign to the dance scene, they chose not to launch on YouTube, but paid serious money to good old ITV to put their ad into the centre break of…….you guessed it…Britain’s Got Talent. You can bet that the perceived price and value of the spots they used had increased dramatically because of YouTube’s free support and the extra 2 million pairs of eyeballs it delivered.   If I were a TV exec I would be gagging to get promo footage of my shows onto YouTube.

The only cause for complaint among ITV shareholders must be that Google let YouTube provide ITV with a global promotional base for BGT, but ITV don’t own the global rights to exploit the programme asset. But that is a different moan.

See Decipher discussing the media coverage on Channel 4 News here.

Leave a Reply

Your email address will not be published. Required fields are marked *