YouTube: The Streaming Ad Giant

YouTube: The Streaming Ad Giant

YouTube

Who knew? YouTube is an advertising giant in the streaming industry. And YouTube is becoming increasingly vital as more people stay at home and stream content in light of recent news events.

According to App Annie, in 2019, YouTube made a whopping $15 billion on ads alone. The news comes courtesy of Alphabet (the parent company of Google): for the first time since Google acquired YouTube in 2006, Alphabet has released YouTube’s ad revenue. And the figures are staggering, accounting for almost 10 percent of Google’s overall $161 billion revenue in 2019.

Why This Matters

The news is important because it underlines YouTube’s dominance in an increasingly crowded arena. As App Annie points out, on Android phones, about 70 percent of time spent on the top five video streaming apps worldwide was on YouTube. The platform, a pioneer in the world of video streaming, continues to hold its own. That’s telling. As Forbes notes, “In a market where new streaming video services seem to spring up overnight, YouTube isn’t losing viewers or ad money.”

Also notable: while many of the top apps are Chinese brands, enjoying strong support in China, YouTube isn’t active in the Chinese market—and yet it is still number one in rankings measuring time spent on the top streaming platforms. By a significant margin.

How YouTube Does It

So how is YouTube achieving this cash cow status?

  • For one, YouTube delivers an audience, and you need an audience to attract advertisers. As Lifewire points out, YouTube is one of the most popular sites in the world. It’s arguably the favorite video-sharing and viewing site on the web today, offering a range of long- and short-form free content. And as Lifewire notes, “Youtube.com is the second most popular website in both the global market and in the U.S for 2020, even though a huge portion of YouTube views are from outside the U.S.”
  • But YouTube also does something else: it continuously offers advertisers attractive products. As we’ve blogged in the past, YouTube’s Masthead ad format for TV allows brands to connect with consumers the instant users access the YouTube app on their televisions. The Masthead format is a response to the fact that while consumers aren’t watching as much linear TV, they are still using their televisions as a tool for experiencing streaming platforms like YouTube. In other words, YouTube understands viewing trends, and is staying nimble in its bid to connect with advertisers in an informed way.

What Can Be Learned from YouTube’s Success?

We can draw two conclusions from YouTube’s enduring popularity:

  • First, streaming platforms, especially Netflix, cannot help but notice how well an ad-supported format on YouTube has been working. Netflix—and other competing platforms—certainly must be feeling more pressure to create advertising products. And that’s good news for brands. (I blogged about Netflix’s potential adoption of advertising in this post, “Why Netflix Might Embrace Advertising.”)
  • Second, YouTube’s growth likely bodes well for apps like Quibi (another destination for streaming video that relies on ads). Quibi is endeavoring to carve a niche in a crowded field; YouTube shows them what’s possible, and arguably creates an environment ripe for inspiration.

Clearly, streaming platforms offer an attractive opportunity to advertisers. Note also that in light of recent events, it is expected that more people will turn to streaming platforms such as YouTube. Per a blog post from PMG, “Popular media platforms such as YouTube and Tik Tok will also likely see a monumental boost as kids and teens spend more time online and at home” during temporary school closures caused by the COVID-19 pandemic. YouTube, with its combination of innovation and reliability, is proving to be a model for succeeding with ad-supported shorter-form streaming. In its quiet bid for dominance, YouTube has become a leader.

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How the YouTube Masthead Ad Format Connects with Television Audiences

How the YouTube Masthead Ad Format Connects with Television Audiences

YouTube

We’ve blogged about the fact that in an era of connected TV, audiences are increasingly watching content that advertisers can’t sponsor — there are no ads on Netflix (yet), for example. But Google is sensing and responding to this reality, as evidenced by the launch of the YouTube Masthead ad format for TV. Essentially, YouTube is helping brands find a new way to get onto TV screens — and into the hearts and minds of viewers.

What Is YouTube Masthead for TV?

YouTube Masthead formatted for television is a response to changing viewing habits. Audiences can access YouTube on their TV screens, and because YouTube is free, it represents a new frontier for brand advertising. As described in Instapage, “[a] YouTube Masthead is a digital billboard placed on YouTube’s homepage for 24 hours, reaching roughly 60 million people (YouTube receives 1.8 billion users/month).”

The YouTube Masthead doesn’t use search histories to earmark users based on their interests or demographics (note that you can target a country where you would like an ad to be shown, though). The Masthead simply appears right on the network’s homepage, allowing brands to reach consumers as soon as they access the YouTube app on their TV. The Masthead, which takes up some prominent real estate at the top of the screen, best serves brands that have the desire, and the budget, to maximize exposure across a sweeping, non-targeted audience. On its blog, YouTube provides an example from an early tester, Ford.

Why YouTube Masthead?

In adapting the YouTube Masthead ad format for TV, Google is capitalizing on the fact that while consumers may have cut the cord on linear TV, they are still using their televisions to experience streaming platforms like YouTube. According to the Google blog, “daily [television] watch time tops 250 million hours per day.” TV screens are still a powerful place where brands can enjoy maximum exposure.

And YouTube Masthead ads seemingly deliver. According to Instapage, Google and Compete researched the impact of YouTube homepage ads. Their findings demonstrated that users “exposed to a YouTube Masthead were four times more likely to visit the advertiser’s website, search for their brand, or engage with even more of their videos.” And because YouTube’s content is so diverse (everything from baking tutorials to the Coachella music festival streamed live) the consumer base will be large and diverse, as well.

How to Move Forward with Masthead

Given the broad reach of the YouTube Masthead format, advertisers will want to keep a few things in mind before diving in:

  • Even though Masthead ads are not targeted, it’s important to remember who is drawn to YouTube in the first place. Know the platform: what videos are trending, for example. Remember that YouTube has a strong focus on entertainment. Is your product a good fit for the typical YouTube consumer?
  • Avoid inside jokes for a specific group. You don’t want your ad to be so broad that it’s boring, of course, but keep it accessible to the large audience you’ll be reaching.
  • You want to stir curiosity with your ad. But remember, given the wide-ranging audience, not all viewers will be inclined to buy. Learn about the features YouTube Masthead makes available — from videos to social shares — and offer consumers different ways to explore your brand, depending on their level of interest or engagement.

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Curious as to whether YouTube Masthead is a good fit for your brand? Wondering if there are other ways you can leverage television viewership in this era of connected TV? Contact us. We can help.

YouTube’s New Verification Policy: Advertiser Q&A

YouTube’s New Verification Policy: Advertiser Q&A

YouTube

YouTube has been fighting a credibility problem for quite some time. As I’ve been discussing on our blog, YouTube has struggled to keep its platform safe for advertisers. For example, YouTube’s reputation recently took a hit when businesses such as Disney and Nestle pulled their ads from the platform after a concerned YouTuber called attention to the number of predatory comments and videos targeting children. In response, YouTube terminated more than 400 channels and tens of millions of comments and then announced that it would ban comments completely for most videos of kids. YouTube is constantly in reactive mode, responding to a firestorm until a new one erupts. But YouTube is also trying to be more proactive, as witnessed by a new development: YouTube is changing its verification program for creators to make it harder for channels to earn a checkmark beside their name.

Initially YouTube also told content creators it would remove verification badges from people who don’t meet a stricter criteria to be verified. In doing so, YouTube created an enormous backlash among content creators, causing YouTube to quickly modify its approach. In the wake of the announcement and subsequent backpedaling, I can see why advertisers might be confused. Here’s what you need to know:

What Did YouTube Announce about Content Creation?

Google is changing the criteria by which a content creator can get a verification badge for their channel. On September 19, on its Creator Blog, YouTube wrote (in a post that was later amended),  “We’ve updated the eligibility criteria for verification badges on YouTube. This change is to help viewers distinguish the official channel of a creator, celebrity, or brand. In the next weeks, verified channels will also get a new look. As a result of these changes, some channels that already have the verification badge will no longer meet the criteria to be verified. These channels received an email from YouTube with additional details.”

The changes were to take effect in October.

Why Is Verification Important?

For content creators, getting a verification badge next to their names is a big deal. As Google notes, if a channel has been verified, it’s the official channel of a creator, artist, company, or public figure on YouTube. Verified channels help distinguish official channels from other channels with similar names on YouTube.

Getting verified does not mean YouTube endorses your content, but it helps you with credibility and visibility. According to The Verge, “Being verified also represents status for creators. Having the checkmark beside their channel name is a sign of being one of the most prominent members of the community.”

How Is Verification Changing?

YouTube is going to make it tougher for a content creator to get the verification badge next to their name. Under YouTube’s current eligibility requirements, channels with more than 100,000 subscribers can be verified regardless of need for proof of authenticity. But as YouTube noted on its blog, “That worked well when YouTube was smaller, but as YouTube has grown and the ecosystem has become more complex, we needed a new way to verify the identity of channels and help users find the official channel they’re looking for.”

So, YouTube is instituting some more stringent requirements to get verified, along these lines:

  • Authenticity: Does this channel belong to the real creator, artist, public figure, or company it claims to represent?
  • Prominence: Does this channel represent a well-known or highly searched creator, artist, public figure, or company? Is this channel widely recognized outside of YouTube and have a strong presence online? Is this a popular channel that has a very similar name to many other channels?

YouTube notified a number of creators that their channels would lose verification status in October. The New York Times reported that YouTube had already sent emails to many content creators with the following message:

We’re writing to let you know that we’re updating the eligibility criteria for channel verification on YouTube. Unfortunately, with these changes, your channel no longer meets the criteria to be verified. We realize this might be disappointing, but we believe these updates will make channel verification more consistent for users and creators across YouTube.

Others received messages that their accounts would remain verified.

Why Is YouTube Changing its Verification Requirement?

YouTube wants to be more careful about how its algorithm recommends authentic video content from respected and high-profile content creators. YouTube has faced widespread criticism (including this highly cited article from The New York Times) that its algorithm recommends harmful content from extremists groups. YouTube has struggled to overcome a reputation for being a poorly moderated community – akin to being a town where a smelly garbage dump resides alongside a sparkling water park due to poor zoning and management. And advertisers don’t want their content in view of a garbage dump.

What Was the Fall-Out from the Verification Change?

Many content creators expressed outraged, as evidenced by this tweet from Kiwiz, an account with 2.34 million subscribers:

The New York Times reported many more howls of protests from content creators. Why, they asked, was YouTube pulling out the rug from beneath them after they had worked so hard to build their followings? Why was YouTube punishing individual artists?

As Caryn Marjorie Jones (CutieCaryn on YouTube) told The New York Times, “It’s just a little sign but it’s something I’ve worked years to get and to develop this fan base, so for it to be taken off was alarming and hurtful and I feel really emotionally impacted . . . I used my verification to set myself aside from everyone else. This could impact my business. Either people won’t think I’m legitimate or they won’t see me in the light they saw before. It will definitely affect my brand deals.”

As the impact of the new verification process became more widely felt, YouTube backed down on the evening of September 20. In a tweet, YouTube CEO Susan Wojcicki said, “We heard loud & clear how much the badge means to you. Channels that currently have verification will now keep it without appeal. We’ll continue reviewing those channels to ensure we’re protecting creators from impersonation.”

What Happens Next?

The process of getting YouTube verification is definitely going to get tougher.  The more stringent process will probably have more of an impact on lesser known creators, such as micro-influencers. YouTube suggests that unverified creators do the following:

  • Use a high quality image for your channel icon to make your channel look professional in search results.

Brands and artists with large YouTube followings, though, will benefit because presumably the more stringent verification process means fewer micro-influencers getting visibility.

What You Should Do

Although the more stringent verification is supposed to protect YouTube’s integrity, advertisers should still watch this development closer and hold YouTube accountable. Over time, your YouTube rep should be able to give you tangible examples of how the change has made YouTube a better home for advertisers. But be patient. Don’t assume the new program will have immediate results.

Consider also how the more stringent verification policy will affect your relationship with micro-influencers on YouTube. If you rely on micro-influencers to build your brand, be aware that some perfectly fine and appropriate micro-influencers might be flying under your radar screen even though they fail to meet the new criterion for getting a verification badge going forward.

Also, understand how YouTube will adapt its badging approach come 2020, which YouTube discusses here (basically, YouTube will distinguish between artists and content creators).

As always with the dynamic world of Google and its many brands, change is a constant. Be vigilant. Hold Google accountable. But realize you’ll need time to assess the impact of a change like this one.

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