Google Sees YouTube Striding Toward Profits


Google’s says its second-quarter financial results show the online advertising market is slowly stabilizing from the swoons of the global downturn.

But the online search giant fell over itself to highlight the fast growing strength in YouTube, the come-one, come-all video site it bought for $1.65 billion two years ago.

YouTube has been something of a laggard in its ability to carry and sell advertising. But Google says this is changing and that profits may not be far away.

“YouTube is on a trajectory we are very please with,” said CEO Eric Schmidt.

Ad showings more than tripled in the past year to the point where billions of ad views are recorded each month, the company said.

And the success is not only apparent on YouTube’s home page, where “we are seeing significant sell through in major markets,” according to global sales President Nikesh Arora, but on search pages and with “pre-roll” ads that appear at the start of videos.

YouTube is starting to show a lot of pre-roll advertising tied to clips of partners, such as Disney, says Arora. “I think the next phase of YouTube is going to be (with) pre-roll views on short clips and long-form video.” Over time, brand advertising also will expand.

So far, there has been little customer drop off from the pre-rolls.

Google wouldn’t be specific on its expectations for profits. But in the “not too long distant future we actually see a very profitable and good business for us,” says CFO Patrick Pichette.

Watch out Hulu. Google may have figured this business out.