ore recently, when browsing through content on YouTube, I have noticed simultaneous mid roll adverts. For further clarification, mid rolls are the ads that play during videos that are 10 minutes or longer - people often find these quite disruptive to their viewing experience, despite marketers attempting to laser target audiences they believe may be interested in their offering. Can you agree with that?
Why Are They Doing This?
YouTube has been a free service since it's launch in 2005. Initially, we went to view short slideshows and funny clips, now it's evolved into a platform where we expect to find quality content. By 'we', I mean the 2 billion people each month who log in at some point each month to view content.
With attention, brings advertisers. They understand the types of videos you watch, notice what you search for and in some cases can identify if you've visited their site before. Therefore, they are willing to pay money to ensure their message reaches you. Last year, YouTube made over $15 billion - largely from ad revenue.
To ensure creators continue to make quality content that attracts users, they operate a 'revenue-sharing' system, where creators receive 55% of advertising revenue, with YouTube seeing 45%. This has allowed many creators to earn a very comfortable living contributing to the platform.
Whilst this has been, and still is a free platform, YouTube have recently been promoting their 'Premium' offering. This is a subscription service that gives you access to the platform ad-free, opportunities to view exclusive content and other excellent benefits we've written about previously. This is currently available in 17 key markets, including the US, UK, Russia and Germany.
Moving towards a subscription based service provides largely guaranteed income, something they have learnt is highly valuable after many advertisers threatened to pull spend over brand safety concerns early last year.
What Does This Have To Do With Mid-Rolls? 😡
Recently, Lyor Cohen - Global Head of YouTube Music, part of their premium offering had an insightful interview with 'The Breakfast Club'. A popular radio show based in New York. As part of the conversation, he discussed the 'future of YouTube'. Around halfway through, he stated that users have previously been "paying with their eyeballs", referencing both pre roll and mid roll ads we have seen on the platform.
However, they realise that the subscription model, the choice of massive streaming companies Netflix and Spotify, is the future. Lyor identifies that markets like the Philippines are not in the best position to fully transition to a subscription-based model. While we look at a family plan at $17.99/£17.99 a month, we need to realise that in some areas of the world, this is what families are fed on. Therefore, they will continue to "pay with their eyeballs" and "suffer" through advertisements.
In markets like the US and UK however, where they are looking to really drive penetration and convert YouTube users over to paid subscribers, ad frequency will increase. They realise that it's highly unlikely that you will abandon the platform, after making it a mainstay within your daily content consumption routine. Instead, you will decide that you do not want to 'suffer' through more ads and eventually subscribe to YouTube Premium.
View the full interview here:
Timestamp: 32:15 when he discusses the future of YouTube advertising and subscription model.
This leads us to the main point we made in our original post about YouTube Premium, as an advertiser, how does it make you feel that one of the key benefits of subscribing to this service is that users no longer will have to "suffer" through your ads. The ads you have spent time and countless resources to produce and distribute. Gradually, as time passes, your reach will decrease. Those of you targeting higher income households will no longer be able to reach the majority of your target audience - as they will all be under a family subscription.
The solution is to ensure your brand is embedded within the content users are consuming. Using an approach that is not disruptive to their experience, but adds significant value. That is how we work with distinctive businesses to clarify their purpose, understand their customers and unlock their value to the millennial audience.
Feel free to get in touch to discuss this further and see how you can take steps towards developing your company's YouTube strategy, you will need it soon.
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