YouTube celebrates five years, but commercial success is yet to come

The video-sharing site used its anniversary to underline its founding commitment to be a place where "anyone with a video camera and an internet connection can share a story with the world", but that only tells half the story.

Formed by three former PayPal employees in February 2005, YouTube has come to epitomise the explosion of user generated content, ushered in by the technology of the Web 2.0 era.

The site's ability to display and share video clips, uploaded by anyone for everyone, made it an instant global attraction.

By the summer of 2006, more than 65,000 videos were being posted each day, and it was soon catapulted into the elite league of the biggest websites in the world, a position it maintains today.

Chad Hurley, the site's co-founder and chief executive, said he had pinned his hopes for YouTube on the basic premise that "everyone in the back of their mind wants to be a star".

Alex Burmaster, director at The Nielsen Company, said: "The fact that almost half of the world's internet population now visit the site is testament to his understanding of this need."

Hurley, in a statement this week, said: "When we registered the YouTube domain on 14 February 2005, we set out to create a place where anyone with a video camera and an internet connection could share a story with the world.

"Five years into it, we're as committed as ever to the core beliefs and principles that guided YouTube's creation."

YouTube's assimilation into all areas of society cannot be disputed. Last October Google announced the site was regularly achieving more than one billion views per day, equivalent to 11,574 views per second.

Its relevance was once again highlighted this month when Toyota GB used it to publicly apologise to customers after admitting that 180,865 of its cars in the UK may have faulty accelerator pedals. The clip has already been viewed more than 20,000 times, while its US equivalent has attracted more than 50,000.

The site has also become an additional platform for some of the world's biggest brands to showcase and supplement traditional ad campaigns.

The US Super Bowl ads for Doritos, Audi and Snickers dominated YouTube's top charts two weeks ago, averaging more than 1.8 million, 1.6 million and 1.4 million views respectively.

Stefan Bardega, managing partner of MediaCom Beyond Advertising, said: "In five years, YouTube has become everything that interactive TV promised to be, but never quite delivered.

"YouTube allows you to stop, pause, grab, embed and all the rest of it while also providing a way to reach and engage specific groups of people."

Charlie McGee, managing director of Carat Digital, has created pages for a number of clients, including Nokia, Kellogg and Asda, and agrees it has been effective in creating vocal and recognisable brand ambassadors.

However, he warned against the falsehood of the "build it and they will come" approach, noting YouTube works best when used in association with other social channels.

Despite YouTube's undoubted reach, the site continues to struggle to attract advertising revenues and has famously yet to turn a profit.

"Most of my clients remain reluctant to be in an environment that's unpoliced and uncontrolled," admitted McGee. "As a commercial proposition user generated content is limited".

This view mirrors the experience of MediaCom's Bardega who said: "It's the default destination site for user generated content, but it suffers commercially from the perception of being the place to find cats up trees.

"Its next major push will be to attract more advertisers by developing its quality content side."

YouTube already appears to be in a transition process, having signed a number of partnership deals with leading global content providers in the past six months.

New commercial tie-ups include British broadcasters the BBC, Channel 4 and Five, in addition to Disney Media Networks, Time Warner, Universal Music and Sony BMG.

The broadcasters long-form content deals with YouTube enables them to keep control of their own advertising sales while reportedly giving them generous revenue share deals.

In an attempt to promote YouTube’s new positioning as a quality content distributor, the site launched its first ever offline multimedia advertising campaign in December centred on the message "YouTube's got TV".

Furthermore, in 2009, the biggest year yet for online video, YouTube's most watched clips were led by Susan Boyle’s audition on ITV talent show Britain's Got Talent back in April.

The clip of Boyle singing 'I dreamed a dream' from 'Les Mis' in front of Simon Cowell, Piers Morgan and Amanda Holden, complete with commentary from ITV's Ant and Dec, has attracted more than 120 million views from around the world.

Elsewhere, the second most watched video on YouTube was from international rapper Pitbull (82 million), followed by the music video for American actress turned singer Miley Cyrus (64 million) and then the expletive-riddled video from The Lonely Island's I'm on a boat (48 million).

While diverse, all have one thing in common. They are examples of professionally produced content, licensed to Google under various rights-agreements.

None of YouTube’s staple user generated content – cats on skateboards, dogs up trees, or wedding dances, made an appearance in the top five.

As Nielsen's Burmaster said: "The past five years has seen YouTube grow into the world's consciousness based on its first-mover advantage around consumer-generated content.

"The next five years will see YouTube become a commercial success based on how well it can infuse professional content in an increasingly cluttered competitive marketplace."