YouTube wants advertisers to spend more to reach the consumers who are increasingly using their television to watch videos on its platform.
The effort is a bid for a piece of the massive ad budgets that go toward traditional TV as well as the fast-growing ad spending earmarked for streaming TV.
But YouTube’s idea isn’t an easy sale, advertisers say.
Many marketers still treat YouTube as a mobile and desktop video-viewing platform—and not a streaming TV service in the vein of
Walt Disney Co.
’s Hulu or
Pluto TV—because that is how most people still watch it. Advertisers also want greater confidence the content on YouTube is safe for their brands and equal to the quality of TV.
“Their soul is social media with user-generated video online,” said Gianluca Toccafondi, integrated media manager for Ingka Group, the largest IKEA franchisee and operator. Such video is important, but offers marketers less control and less visibility into where their ads appear, he said.
“Becoming a TV platform requires a lot of field work in curating the content and really defining the audiences you’re curating this content for,” Mr. Toccafondi added.
More than 100 million people in the U.S. watch YouTube and YouTube TV, the company’s pay-TV service, on TV screens each month, according to YouTube. Watch time in the U.S. on TV screens was up 80% year-over-year in March.
Globally, YouTube says more than 2 billion logged-in users visit its platform each month, with 70% of watch time occurring on mobile devices.
YouTube isn’t pitching its TV inventory as an improvement on mobile and desktop ads, but as an additional option for advertisers, albeit one that can help YouTube compete for the ad dollars allocated for TV.
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Advertisers spent more than $6.5 billion in the U.S. on advertising that appeared on internet-connected TV screens in 2019, according to eMarketer Inc.
YouTube is proposing upfront deals, in which marketers commit to ad buys further ahead than they typically would for digital video, for its apps running on smart TVs and streaming-TV devices.
YouTube on May 19 announced an ad-buying category for marketers seeking to reach its users on streaming TV screens. The lineup includes videos by personalities on the platform, YouTube’s own programming and traditional TV shows and movies available through YouTube’s main app or its pay-TV service. It is available only in the U.S. and as part of the platform’s YouTube Select program, which reserves ad inventory across categories of top-performing YouTube channels.
Streaming TV inventory through YouTube Select can cost two or three times as much as TV ads available through YouTube’s auction, ad buyers said.
“More and more marketers are having a dedicated line item in their media plans for streaming,” said Debbie Weinstein, vice president of global solutions for YouTube, a unit of
Google. “We want to make sure they are considering YouTube as well.”
Marketers said they see value in YouTube’s TV apps as an incremental addition to what they already spend on the platform.
“YouTube has been more of a platform to be able to reach mobile consumers,” said Minjae Ormes, chief marketing officer of Visible, a prepaid phone carrier owned by
Verizon Communications Inc.
“To the degree connected TV viewership is happening on YouTube as an extension of that, it’s useful.”
Ms. Ormes, a former YouTube marketing executive, said she wants to know more about what YouTube users watch on TV sets, whether it’s the same programming they tend to view on mobile devices, for example, or whether it’s more like TV.
Ingka Group’s Mr. Toccafondi said he wants to see more from YouTube on the particular value of its TV inventory and its brand-safety and quality standards.
YouTube offers brand-safety controls through YouTube Select, including the option to serve ads only on videos the company has verified as appropriate for brands, a YouTube spokesman said.
TV screens are a small—but in some cases growing—piece of advertisers’ YouTube purchases. A senior executive at one ad-agency holding company said TV screens account for 10% of YouTube ads it buys through the platform’s auction, unchanged from last year.
An analysis of 10 clients’ ad spending by digital ad agency ForwardPMX, part of Stagwell Group LLC, found that TV screens accounted for 28% of their spending on YouTube from January to May of this year, up from 13% a year earlier.
Delivery on TV screens is included by default on YouTube ad buys, but in most cases, ForwardPMX will turn off that option and do separate TV-specific buys, said Jessie Mamey, senior vice president of digital strategy at ForwardPMX. TVs are better suited for raising brand awareness, for example, than for generating actions like clicking through to an advertiser’s website, she said.
“On connected TVs, your intent is to lean back, versus already being leaned-in on mobile,” she said.
For some marketers and ad buyers, YouTube’s biggest challenge will be YouTube itself.
YouTube already commands a bulk of digital video ad spending, and the audience-targeting the platform provides makes the screen on which those ultimately ads appear less essential.
“A lot of times on YouTube, I am targeting more the individual versus the household or a screen,” said a top media buyer who said his agency spends more than $100 million annually on digital video, of which the lion’s share goes to YouTube. “I know if I’m reaching you on a screen, I don’t care what screen it is.”
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