What Susan Boyle and Japan can teach YouTube

The most popular video of Susan Boyle’s performance for Britain’s Got Talent on Youtube.com has amassed over 70 million views as of June 2009. Her outstanding performance on the popular TV show would have made her famous in the Great Britain, but it is YouTube that made her a global household name.

Let’s imagine if 1% of the viewers actually bought an mp3 of her performance at 99 cents each, the video would have the potential to generate $700,000 revenue.

But of course, with YouTube’s current business model, there is no way for the visitors to easily access related products featured in the millions of videos available.

On the other hand, Nico Nico Douga, the second most popular video site in Japan after YouTube, knows better. Nico Nico Douga operates an affiliate marketing program called Nico Nico Ichiba. After each video, there is an advertising section, where the video uploader or premium users can choose related products from sites such as Amazon Japan and Yahoo! Shopping to be added to the list. If a video uses music, Nico Nico Ichiba also offers ringtones and other mobile related products for purchase.

Nico Nico Ichiba is essentially a highly targeted, user-generated recommendation system for products related to a video. Unlike banner ads which are either ignored or blocked, Nico Nico Douga provides a valuable feature that benefits both the user and the advertiser.

For the user, Nico Nico Ichiba serves as a platform for video and product communication. Some of the product listings are funny or parodistic, and users can get a good sense of what the video is about by looking at what kind of product are being recommended. On the other hand, the user can also explore a product to see how it is composed.

Targeted marketing, such as in Google’s case where they search for keywords in emails, could be disturbing and might inhibit user trust. With a recommendation system such as Nico Nico Douga, giving the viewers a voice has not only cut down the “creepiness” factor, but has generated revenues for the site and in the end, it is just a fun experience for the users.

Affiliate advertising is projected to generate close to $2 million (US) in revenues for Nico Nico Douga for 2009. Instead of the banner ads and the embedded commercials, advertisers should leverage the option of having a product centric recommendation system integrated with the various content platforms available, to not only engage the audience, but also streamline the e-commerce purchasing decisions.