The Future of Advertising on YouTube

In May of 2005, a beta test of YouTube went online. By the following year YouTube was generating more than 100 million video views a day. Fast-forward a decade, and YouTube is the world’s largest video site boasting more than 1 billion users who upload 300 hours of video a minute. YouTube stated that it’s now reaching more 18- to 49-year-old consumers on mobile than any TV network. The effect that the site has had on media consumption habits and the digital advertising business is measureless.

But YouTube is changing up the game. The Google-owned company recently announced it plans to introduce an ad-free subscription service as early as this year. “By creating a new paid offering, we’ll generate a new source of revenue that will supplement your fast growing advertising service,” Google told video channel creators.

Where does that leave digital marketers? And what does this altered value proposition mean for the future of advertising on the site?

A Challenger Arrives

As my colleague Frank Sinton reported earlier this week, the uncertainty surrounding the site’s future is in part tied to industry competition. YouTube is under pressure from Facebook, which is now serving 4 billion video views a day and is actively pursuing content partnerships with media companies that would bring more quality videos – and potentially more advertising opportunities – to the network.

To date, ad agency executives and video audience measurement services seem to be in agreement that Facebook isn’t yet equipped to seize ad dollars from YouTube. That said, a recent study by Visible Measures of video campaigns released on both YouTube and Facebook found that while YouTube’s share of viewership is ultimately greater, Facebook is quicker to circulate a brand video out of the gate. In other words, both have significant value, and there’s no question that marketers will be scrutinizing the unique benefits of each platform moving forward.

Digital Influencers Partner Up

Even while Facebook works to expand its video offering, new advertising options are cropping up on YouTube. In April, popular women’s lifestyle site SheSpeaks launched a YouTube channel for the first time. The company dubs itself “the engagement platform that connects influencers with brands,” and SheSpeaksTV represents a new platform on which to do it. “About two years ago, we started to notice an uptick in video viewership,” says Aliza Freud, chief executive (CEO) of SheSpeaks. “Community members told us they wanted to see more video content featuring real women in authentic lifestyle situations, but expressed frustration because they weren’t finding such content on existing YouTube channels.”

On SheSpeaksTV brands can sponsor videos, most of which are created by and star the community’s members. The value of partnering with social influencers to reach a committed and passionate online audience, lend a brand authenticity, and spread positive word of mouth can no longer be ignored, and Freud has seen its advantages for herself. Earlier in the year SheSpeaks worked with a YouTube influencer who had more than 1 million subscribers to create a video for a consumer product brand. The resulting content drove “hundreds of thousands of views, thousands of thumbs-ups, and hundreds of comments,” says Freud. “YouTube is still the dominant player in the online video space, with an existing, dedicated audience.”

Brand Channels Allow for Sponsored Videos and Native Ads

Working with digital influencers is one path to YouTube advertising success, but media companies are finding ways to create marketing opportunities through custom sponsored content as well. This is largely because consumers – and Millennials in particular – aren’t only viewing user-generated content. According to TubeFilter, which ranks the 50 most-viewed YouTube channels weekly, BuzzFeed Videos was the second-most popular channel last week with more than 58 million views.

Also on the list was WWEFanNation, owned by World Wrestling Entertainment, and Activision’s YouTube channel for video game Call of Duty. Premium video content created by companies like these can still attract a massive audience of engaged and active consumers, and their appeal can be translated into positive feedback for brands. BuzzFeed‘s branded and sponsored videos, like those featuring Friskies, General Electric, Johnson & Johnson, and Tidy Cats, have generated views ranging from close to a million to more than 5 million – and counting.

The next few months promise to be interesting as industry rivalries intensify and video contenders implement changes that could have a profound impact on their advertisers. Whatever the future has in store for YouTube, you can bet it will be big.

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