YouTube’s New Online Advertising Concept for 2012

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.

He asserts:

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).

watching computer screenOf 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.

Joseph Giorgi

Joseph is the head of the Media Team at Quality Logo Products. He's a video specialist, blogger, perfectionist, and all-around likeable guy. When he's not busy focusing on the nitty-gritty details of his written and visual work, he's normally listening to bad 80s music and scouring the internet for useless information on useless subjects. You can also connect with Joe on Google+.


  1. Alex Brodsky

    Though the aim of this campaign is to get bigger name companies to advertise on YouTube, I feel like this would ultimately help smaller companies as well.

    With smaller revenue streams, it would be a shame if they choose YouTube as a way to advertise, use almost their entire profit margin to pay the set price for 1,000 ad occurrences, and then their ad is only viewed 20 or so times. This makes it a lower risk investment for a smaller company trying to get their name out there.

    • Joseph Giorgi

      Very true. It’s likely that YouTube will be trying to round up all the advertisers it can in the coming year. With its new look and new focus on sponsored content, the site has all kinds of potential going forward.

  2. Mandy Kilinskis

    Even if it means more ad time for the user, I’m glad that advertisers can be more confident about their ads reaching their intended audience. I imagine that it’ll cost YouTube some money at first, but if the process takes off, they could (and really, will) tailor the prices to gain that loss back.

    I’m definitely interested to see how this ends up working for everyone involved. And as Alex said, if small businesses can take advantage of it, all the better!

    • Joseph Giorgi

      It’s an ambitious move (and yes, YouTube will likely take an initial loss), but it does make a lot of sense in the long term. The site has certainly matured aesthetically, so its new, forward-thinking tactics are probably the most sensible move for the brand.

  3. Amy Swanson

    Great post, Joe! I think this sounds really interesting, especially since they can detect when the listening volume is greatly reduced or muted. As a company I’d be all for having my content actually seen/heard instead of ignored when the person muted the video for a few seconds.

    Really interesting stuff for sure!

    • Joseph Giorgi

      Thanks! YouTube definitely seems to be headed in the right direction with this move.

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