If I build it, will they come? Let’s say they do come — will it matter?

A FastSpring client invested some time back in 2007 into making videos to post on YouTube which would demonstrate their product and hopefully drive traffic and sales to their website where users could buy the company’s software. They were extremely successful in generating interest in their primary video, “Kitty said what?”, which now has about 4 million views and was nominated for the 2007 YouTube awards last month.

But what can one expect to earn from a wildly successful video like Kitty said what? After all, most videos never make it bigtime, and their producers may assume they are missing out on riches if they had intended their videos to generate revenue. How many units of software do you think 4M views resulted in? Keep in mind, this is a uniquely synergistic situation in that the users who view the video and click a link to view the producer’s website (the link is posted at the end of the video and next to the video in the comments section) can actually use the software available for sale on the producer’s website to create their own similar videos.

Did 4M views result in 10,000 unit sales? 5,000? 500? More? Less? The answer is fewer than 250 units. (Note: The software company provided their permission for us to disclose their sales results related to this YouTube promotion.) Crazy, right? It’s definitely disappointing, but shouldn’t come as a huge surprise to veterans of marketing, given how many people you need to show your product message to in order to generate a sale. Let’s say perhaps 1% of those who view the YouTube video will visit the producer’s website. 1% isn’t so out of the ordinary when you think about click through rates for, say, banner ads which often perform far worse than that. And you have to remember, these aren’t users dying to pay for products, these are YouTubers looking to watch funny videos and be entertained. Given the type of users, if you assume 1/2 of 1% of those who visit the producer’s website actually buy something (which would not be an atypical visit to sale conversion rate for some products), you get close to the results mentioned.

So is there a way to make money creating popular videos on YouTube like people assume? Well, on the bright side, YouTube recently announced that videos can now have ads running inside and next to them and their producers will earn a fee for every video view/page impression. My guess is that this will become a more lucrative way to monetize popular videos, but we’ll have to see how it plays out.

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