Julie Supan, Chad Hurley and Steve Chen, YouTube

Chances are, if you're reading this story you already know what YouTube is. Perhaps you've also heard about lonelygirl15, the exploding Mentos, the site's 100 million daily downloads, its 63% or so category share among video-sharing sites, its inability so far to make money—with losses pegged at $20 million a year—and its warehouse of content, which by one account, adds up to more than nine years' worth of stuff. In fact, if you're reading Brandweek, there's a good chance that you have already put one of your ads on the workman-like site and anxiously tallied how many times people had viewed it. Like podcasting before it, getting a respectable amount of play on YouTube may be one of those checklist items for your brand zeitgeist meter that proves your cultural relevance. Or, at the very least, gives your team a chance to say, "Yeah, we did that." You may also be wondering, in fact, if this whole YouTube thing is a fad. Will the brand become the mid-aughts equivalent of Pets.com or more aptly, AltaVista or Netscape, a once-dominant media darling promoted as the Next Big Thing that will, in the end, be forgotten (or extant in a much diminished form)?That may well be the case, but it's also irrelevant. Whatever YouTube's prospects and however much its growth-over-revenue business model seems unsustainable, few, if any brands, have had more of an impact on the marketing landscape over the last 12 months. For that reason, YouTube and its founders, Chad Hurley and Steve Chen, and its senior director of marketing, Julie Supan, are joining the winner's circle as Brandweek's Marketers of the Year.Though it clearly wasn't the first of the file-sharing sites, YouTube came from nowhere and established itself as a household name in about 18 months, all without spending a cent on advertising. During that same period, YouTube has morphed into almost as important a channel for marketers as network TV.YouTube's swift rise has few parallels in branding history. In 2004, Hurley worked as a designer at PayPal, where Chen was employed as a techie. Hurley also was a consultant for the producers of the film Thank You For Smoking. By this summer, Chen and Hurley—27 and 29, respectively—were hobnobbing with the likes of Les Moonves, Barry Diller and Bob Iger at Herb Allen's get-together in Sun Valley, Idaho.It all started when, at a dinner party in January 2005, as the story goes, Hurley and Chen were just having fun shooting video with their digital phones. The next day, they realized how difficult it was to load video files onto the Internet. A month later, the pair activated the URL youtube.com.By May 2005, a beta version of YouTube went live, but there were only 30 clips on the site, many of them featuring Chen's cat. By mid-year, YouTube was generating good viral buzz among a certain section of the media elite. Ian Schafer, president of Deep Focus, a Brooklyn, N.Y., entertainment marketing firm, said he first heard of YouTube when it became the de facto video player for MySpace's legion of teen users."We started getting links, we started getting e-mails and we thought, 'This is really catching on," he said. Schafer said he tried to contact YouTube, but then, the now-60-person company "had no face."That changed somewhat when YouTube hired Supan, 33. A former pr rep at Best Buy who had moved to Sequoia Capital, she took the reins of pr and marketing. (As this issue went to press, YouTube hired CNET's Suzie Reider as its first chief marketing officer.)YouTube's first mention in the mainstream media came that August, when the Gannett News Service name-checked the newcomer as sort of a video version of Flickr, an established site where people posted photos. The New York Times then ran an Oct. 27 trend story about video-hosting sites, mentioning YouTube along with ClipShack, Vimeo and Blip.tv. As is typical, the coverage inspired others to follow suit.But YouTube's coming out party, as it were, didn't happen until late December, when someone posted a hilarious skit on the site from NBC's Saturday Night Live called "Lazy Sunday." The video spoofed gangsta rap by having two nerdy SNL alums—Andy Samberg and Chris Parnell—opine about seeing the Disney flick The Chronicles of Narnia, and scarfing cupcakes from Magnolia Bakery, a well-known Greenwich Village stop for folks in need of a sugar fix. The clip quickly spread across the Web over the holidays, when many people had time on their hands (and more than a few had new PCs) with 1.2 million downloads logged before the year ended. "One or two things like that have been enough to convince the average user that that's the site to go to for video," said Joe Laszlo, senior analyst at Jupiter Research, New York.Boredom may have also helped. During the Blizzard of '06, heavy snow blanketed Northeastern states, crippling transportation and disrupting the lives of millions for nearly a week. That month, YouTube logged 4.2 million unique visitors, more than Apple's iTunes, per ComScore Media Metrix. (By August, YouTube's uniques had vaulted to roughly 19 million.)Attention, as they say, breeds attention. Lazy Sunday set off a virtuous circle: People who wanted to post a video sought a site with an audience, so YouTube's audience got bigger as more people posted. Even petite actress Natalie Portman got into the act with a Saturday Night Live bad-girl rap act in March that gave the show its biggest whiff of cool in nearly a decade, but got much more attention once it ran on, you guessed it, YouTube.Why were netizens flocking to YouTube rather than some other site? After all, there are about 200 other destinations—from heavies like Google, Yahoo!, AOL and MSN, to iFilm, Stage 6, Bolt, Blip.tv, Clipshack, Phanfare, eVideoShare, Streamload and BigVCR—that do the same thing, per Michael Goodman, a senior analyst with The Yankee Group, Boston.Supan reasons that YouTube emerged atop the pile because of one simple fact: It built a better mousetrap. "The reality is that when you look at all the different sites, each one has a different model," she said. YouTube's distinction? Short-form content in a free community that doesn't need any extra software. Instead, to watch a video a user just hits the "play" button; posting is as easy as sending an e-mail with an attachment. The difference helped Supan & Co. stand out."YouTube is a free service that is extremely easy-to-use," said Chen. "There are no downloads, and hundreds of audio and video formats are instantly converted to Flash, which makes it fast and easy for the community to watch and share video."YouTube also empowered its users to do the clicking by eliminating any centralized "voice." No one at the company chooses or recommends videos—viewers decide what they want to see. Moreover, unlike iFilm, users don't have to watch any preroll ads, but they also are encouraged to send ad clips to friends and add comments and ratings."I think you can make a certain parallel to MySpace in that both sites were oriented toward user-generated content," said Philip Remek, senior equity analyst with Guzman & Co., Miami. The latter feature put YouTube squarely in the camp of second-generation communities like Web 2.0 that let users post their own content and create their own networks. As Tina Sharkey, svp-AOL network programming and community, says, the difference between the old Web and 2.0 is that in 2.0, people are searching people rather than just searching information.YouTube also is at the vortex of some wicked-fast change. At its launch, YouTube rode two hot Internet media trends: video and social networking. The former was a case of broadband penetration, which meant that 55 million or so households could now watch online video as it was intended—without the jerky stop-and-go of dial-up.The latter came about after blogs and sites like MySpace gained favor. Brands like Sony and Universal Pictures took note and began running teaser ads on the social networking hub. YouTube was a somewhat tougher nut to crack. Initially, the site didn't run any banner ads. What's more, unlike today, there were no "channels" for promotion purposes, like the one created for Paris Hilton's debut album in August.Lessons from a ChickenMarketers soon learned that although YouTube had few opportunities to advertise, it was a natural clearinghouse for viral, consumer-generated videos, which were suddenly the rage on Madison Avenue. That mania was driven somewhat by Burger King's massive success with Subservient Chicken, a Web site where users could instruct a chicken to perform different antics that was visited more than 400 million times since going live in 2004. Perhaps the first brand to see YouTube's potential as a network for such viral videos was Nike, which late in 2005 placed a two and a half-minute video on the site of Brazilian soccer star Ronaldinho trying out a pair of Nikes. The video has since been seen more than 20 million times.Hurley believed Nike's bet was even more significant than Lazy Sunday. "We learned that Nike had uploaded the clip and it had taken off virally," he said. "This was the transition point when we saw that both professional and user-generated content could be popular with the community as long as it is entertaining."Trevor Edwards, evp-global brand and category management at Nike, said the ROI on viral videos was extremely high: "For a modest amount, we make digital content readily accessible to the world, giving consumers the choice to view it, on-demand. In the case of the Ronaldinho video, we've had an incredible consumer response from every corner of the world." Nike followed that effort with an ad featuring trash-talking Italian soccer player Marco Materazzi that's gotten about 500,000 views so far, Edwards said.After BK's and Nike's success, getting a hot viral video on YouTube became a neat goal for multitudes of brand creatives. After all, if a TV spot really takes off, it will find its way to YouTube anyway. "We call it the TiVo for Web 2.0 culture," said Chad Stoller, executive director of emerging platforms at Organic, a New York digital agency that handles DaimlerChrysler, Sprint and Bank of America, among others. "It's become the de facto place for 'Did you see that?' "Soon, others saw the lure of a viral network featuring video. In a speech at this year's Cannes Lions International Advertising Festival in June, Mark Tutssel, worldwide chief creative officer at Leo Burnett, hailed YouTube as the advertising model of the future: "On sites like YouTube, advertising can be an acceptable part of the landscape, sitting alongside music or films," he said.Schafer of Deep Focus agreed. Earlier this year, he paid to have The Weinstein Co.'s Scary Movie 4 placed as the opening default video on the site. But does YouTube placement really work, or is it just a New Media checkoff item?If anyone needed proof, perhaps they should look at the case of the exploding mints. Last spring, a video of two pranksters in Jackass-style action began making rounds on various sites. Their neat trick? Dropping Mentos, breath mints with a hard candy shell, into a two-liter bottle of Diet Coke and watching the contents shoot out like a geyser as the mints dissolved and created a chemical reaction. Though the experiment wasn't new—every five years or so people apparently rediscover Mentos' fizzy properties—thanks to YouTube, within weeks, imitators filmed their own versions, sending viewership of the Mentos clips to 600,000 and prompting a "let's prove it" segment on Discovery's Mythbusters. Indeed, sales of Mentos rose 14.5% to $27.2 million for the nine months ended Sept. 10, per Information Resources Inc.That kind of jump doesn't just come from science experiments, maintained Pete Healy, vp-marketing at Mentos parent Perfetti, Erlanger, Ky. "We have seen a significant lift," he said. "At the same time, some of it may have been caused by freshening up packaging or grassroots marketing. It's hard to parse it all out and say this caused that."Schafer, meanwhile, said research revealed that 4% of those who went to see the Weinstein Co.'s Pulse in August had seen a teaser clip placed on YouTube. "That's a significant number," he said. Unfortunately, some networks see YouTube as a foe more than friend. After first issuing a cease-and-desist order during the aforementioned Natalie Portman episode, NBC has come around as a partner. But its Universal arm said it was mulling a lawsuit against the site over copyright infringement, prompting YouTube to develop a new content identification and royalty reporting system for introduction later this year. For detractors and intellectual property types, YouTube "gets them a little nervous," Schafer said.All that leads to the multiple theories of how YouTube will eventually be undone. After all, even huge audiences come and go. Witness Napster. Will it be rivals like Revver (the first to air the Mentos/Diet Coke clip and the new roost for lonelygirl15) that pay people for posts? Will YouTube's new alliances make it just another shill for, say, revenue partners like Fox and Warner Bros. Records? Will users be repelled by ads? Will Google perfect its video search tool? Or will YouTube be unable to convert its monumental user-base into real dollars?It is hard to say with certainty, but until then, YouTube can enjoy its status as the Web equivalent of all five major TV networks combined. "They've got the influence, the demographics and the unbelievable scale," said Steve Rubel, svp of Edelman PR's Me Too Revolution group. "They're in the cat-bird seat."

Brand Marketing

Julie Supan, Chad Hurley and Steve Chen, YouTube

Todd Wasserman

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