Why Google spends $1.65 billion on YouTube

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For many of us, 1.65 is a heck of a lot of money. In Danish crowns, $ 1.65 billion is nearly 10.000.000.000 dkr. (Big number, right?) You could also compare the price to the costs of the Great Belt Bridge, the largest construction project in Danish history. You could build another for the cost of 2 YouTube deals!

So how come Google, famously known as the King of the Internet, wants to spend this kind of money for a website making it possible to post your own videos? Lets try with some answers: Because YouTube is the hottest web 2.0 site for the time being? Probably not. Because Google wants you to be able to laugh harder watching this clip? Probably not.

The answer is more likely that YouTube is giving Google a big advantage in selling ads (their main revenue-driver). Google is biggest in online text ads. Number one rival, Yahoo is biggest in online banner ads. However the next revenue-driving factor in online advertising is predicted too be – Video ads. So Google just bought the future in online advertising now holding 50 % of the market for online videos. (Besides Google can already now start showing text ads to the 40 million daily visitors at YouTube.

So. Congratulation Google, what at bargain!

(A note about the price of the YouTube deal. Google shares gained 2% the day the deal was announced. This gain equals the value of YouTube.)

By Rudolf

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One Response to Why Google spends $1.65 billion on YouTube

  1. its usefule for me,thanks for your sharing.

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