Only a few short months after its website redesign, YouTube has announced plans of becoming a major advertising outlet in the next year. Its aim is to attract big-name advertisers, and to do so by way of forward-thinking tactics. How exactly do they plan to do it?
By taking a wholly different approach to online advertising.
In an interview with AdWeek, YouTube’s VP of sales and marketing, Lucas Watson, discusses how “the current advertising framework for video is based on reach and frequency – cost per impression.” He notes, however, that a cost per view system may ultimately prove more sensible for YouTube.
Cost per impression (CPI) is essentially the standard for measuring the effectiveness of an ad campaign and has long been the basis for revenue generation in online advertising. The concept is that brands pay a specific dollar amount for a specific number (usually 1,000) of ad occurrences – be it banner ads, video ads, text links, or any other method. CPI in online advertising is basically an extension of the ad system that the television industry has thrived on for decades.
But Watson believes that YouTube will benefit from a newer approach, one where the advertiser only pays for the ads that actually reach human eyes.
The [CPI] system is built with the understanding that most people will never actually watch your ad. Imagine if we said, ‘We’re not going to charge you cost per impression; we’ll only charge you cost per view.’ That’s a mind-bending concept for many people. Because of the Internet, that becomes possible, whereas in linear TV, it’s not possible.
But is it technologically feasible for the video site to charge its advertisers only for viewed advertisements? As TNW notes, Spotify – the streaming music service – already has its own solution for ensuring that users are exposed to ads, which is “to pause advertisements every time a device’s volume is greatly lowered or muted.” YouTube will naturally need to have a similar system in place next year (if they don’t already).
Of course, if and when YouTube can successfully acquire ads from bigger and better brands, it won’t necessarily mean that the average user’s experience on the site will improve. Since users will inevitably be forced to endure advertisements, the least YouTube could do would be to tailor its ads more effectively.
Thankfully, that’s exactly what the site has in store. According to Watson, users will “start to see some integration between [Google+] and YouTube” in 2012, which means that YouTube could conceivably pull user data from Google+ in order to deliver the right kind of ad content to the right kinds of users.
Delivering relevant ads to users? Sounds like a solid plan.
Charging advertisers only for ads that are viewed? Seems fair enough.
Will YouTube be getting the best of both worlds in 2012? Or are they biting off more than they can chew? Time will tell, but feel free to share your opinions below.