YouTube Raises $8 Million from Sequoia Capital
YouTube is in trouble. Apart from the obvious problems with copyrighted material, their businessplan (which I know nothing about) seems flawed: It
plans to start doing contextual advertising by the middle of the year.
That is a problem. If contextual ads is the best idea they can come up with (come on guys!), their brand will suffer heavily. And I don't think their brand is that strong right now, although they are very, very popular. The problem lies also in their cost structure: YouTube must be quite expensive to run. So just placing ads on there? Contextual ads?
The thinking behind contextual ads is that the user is interested in them because they are "relevant" to them. Think about this in the context of YouTube (not a Google search). I'm not gonna give away what I think they should be doing, but it's definitely not contextual advertising.