YouTube: Placement Police

In recent months, YouTube has set off some jangled nerves among several of its more popular content producers. The company issued written notifications to several producers who have inked branded integration deals directly with advertisers, gently reminding them that according to its Terms of Service, users are not to post commercial videos on YouTube without permission.

The subtle implication is that YouTube could yank down these users’ videos if it so chose. But the bigger issue is that the Google-owned video giant needs to monetize as much of its content as possible. And as more brands engage in the practice of paying popular video bloggers to integrate their products into videos—rather than purchasing advertising on YouTube—Google needs to find a way to balance its revenue needs with keeping its most prolific talent happy. Officials said the company will soon announce a new formalized process for branded integration videos.

“We have a policy, and if we discover they are embedding stuff we will definitely let them know,” said Tom Pickett, YouTube’s director of online sales and operations. “We have tried to take a more hands-on approach to see if we can facilitate deals. But they shouldn’t be fearful of getting booted off the site.”

Kevin Nalty, a marketing director at Merck & Co., who produces a series of sophomoric videos on YouTube under the moniker “nalts,” recently received a slightly scary e-mail from YouTube about one of his videos containing brand messaging. But he understands YouTube’s need to protect its business. “It’s not unreasonable,” he said. “They are paying these high bandwidth fees, and they don’t want to be seen just as a dumb pipe.”

YouTube has sometimes urged producers to buy support media to drive traffic to their branded videos. But requiring brands to absorb additional costs risks making product placement deals less attractive.

Some producers complain YouTube is inconsistent in its enforcement. Popular video creator Cory Williams, known as “Mr. Safety,” said he’s worked multiple sponsors into his videos, and YouTube has never bothered him as long as he runs overlay and banner ads during his clips. But advertisers that purchase overlay ads on YouTube don’t necessarily want to sponsor videos that are already sponsored. “We’re very sensitive to that,” said Pickett.

Sometimes, producers say, YouTube deliberately turns a blind eye to paid product placements but refuses to promote those videos. That can significantly limit a video’s reach, leaving sponsors unhappy. “YouTube has so much power to push videos to the right audience,” said Tim Jones, COO of digital producer Animax Entertainment, which recently featured brand messaging from Hardee’s in its Nascar-spoofing series SlotCar—without YouTube’s prior knowledge.

But Jones recognizes that some sort of revenue sharing model is inevitable. “YouTube should participate in revenue that is generated on their site,” he said. “This is something that would never happen in TV.”