In my first month of blogging, I have been stunned by the pervasive use in the blogosphere of YouTube, a year old start-up that developed a simple user interface to upload, organize, watch and track user generated videos. YouTube draws in 9 million users, who upload 35,000 videos and view 30 million videos each day and has become one of the leading Internet providers of videos, ahead of Yahoo! and Google. 

It is too early to say whether YouTube will become the latest Internet casualty, the next Napster or the next HBO – they are still in an early stage of figuring their business model, of trying to monetize a growing young 18-34 male user base and of addressing piracy issues. For now, they've struck a few preferential placement deals (i.e. home page placement) with E! Entertainment and studios who want to promote movie releases. But the phenomenon is well worth watching from an advertising perspective. Ben McConnell at The Church of the Customer Blog attributes the fantastic growth of YouTube to designing itself around "what appears to be one of the more significant contributors to the growth of an online product: Enabling a community of users to create content around content” with viral components such as "Share this video" and "tell a friend".

Video communities have emerged only very recently and it is too early to establish general trends, but three word of mouth events have caught my eye on YouTube:

Trend #1: brand created entertainment content. In October 2005, Nike produced a pseudo home digital video of soccer star Ronaldinho, practicing while wearing his new Nike Gold shoes. The clip was downloaded 3.5 million times on YouTube and provided Nike with tremendous exposure to its core young male audience. As the young generation moves away from traditional TV to dedicate its time to watching the likes of YouTube, I anticipate that more brands will develop entertainment ads. However, entertainment videos are not limited to large brands; they are also an opportunity for small businesses to drive traffic. Tekserve, a NYC Apple retailer, created a great campaign, featuring over $60,000 worth of Ipods cascading like dominoes, which was downloaded 200,000 times in the last 3 days.

Trend #2: User driven product advertising. User generated videos could be leveraged in a similar fashion to product placement on TV. Although not intentional, the use of Logitech’s new webcam features on the Breakup was viewed by 300 000 YouTube users and greatly contributed to awareness of Logitech’s offering. Melody – “Bowiechick”- discusses her break up with her boyfriend in the video while testing new features of her webcam. One minute, she appears to be wearing glasses, the next she's strapped on a gas mask. Right after her nose and eyes are those of a cat. Following a series of videos, Logitech offered her to choose any product she wanted. The product placement trend is expanding across the blogosphere with Nokia for example promoting its new N90 phone through the 50 most influential bloggers in Belgium and establishing a blogger relationship blog.

Trend #3: Multi channel word of mouth campaign. When Chevrolet decided to combine its Apprentice/Tahoe Campaign with an online CGM (consumer Generated Media) campaign, I'm guessing that they did not anticipate the additional viral impact of YouTube. On the Chevy site, users could create their own customized video commercial, complete with text and background music. Environmentalists took the opportunity to produce spoof videos and published them on YouTube. A YouTube search on Chevy Tahoe produced 800 videos with the most viewed parody “The Ultimate Padded Cell” generating 9000 views. However, I believe that the word of mouth on YouTube was ultimately beneficial to Chevrolet and contributed to the 4 million page views, 400,000 unique visitors and 22,000 ad submissions on their site. Ed Peper, Chevrolet’s general manager, commented on the success of the campaign on Fastlane: “So, a few media pundits seem to think this social media program was a failure and others seem to revel in the apparent anarchy. We, on the other hand, welcome the opportunity to clarify the facts regarding fuel economy, vehicles equipped with E85 capability, and consumer choice. In our opinion, this has been one of the most creative and successful promotions we have done.”

It is really too early to understand how quickly this phenomenon will scale beyond the 18-34 young male audience and how many advertisers will be attracted to this medium. What do you think? Is this the latest fad or a profound change in advertising models? Is it one of the few ways to connect with a young audience?

In the meantime, we can continue to watch this trend, relax and be entertained by the likes of this wonderful “real Simpsons” video (yes it is a trailer for the Simpsons).