Ad inventory on live-streaming channels could also assist YouTube vend more premium packages
YouTube TV, Google’s new skinny bundle of live-streaming broadcast and cable channels, is evidently the company’s effort to challenge traditional pay-TV distributors and appeal to cord-cutters.
It’s also a backdoor for Google to squash its way into the traditional TV advertising business.
Google has long wanted to snip a mass of the more than $70 billion U.S. TV ad market. The company of late has obviously tried to position YouTube as a viable alternative for TV advertisers seeing to reach young people, with limited success.
“Google doesn’t improve into its market cap over time without taking a mass of TV advertising,” stated Dave Morgan, chief executive at Simulmedia, a company that assists marketers to use data to buy TV ads.
Even as YouTube has publicized staggering growth, with viewers watching more than 1 billion hours of video a day, “it hasn’t squeezed TV,” he stated. “Maybe it’s down a single point in viewership. Advertising hasn’t budged.”
At present, as part of the $35-a-month package of 40-plus channels that will roll out in the next few months, analysts have gambled that Google may have access to about 2 minutes of commercial time every hour to vend to advertisers on the cable networks featured in the service. It’s the time typically allowed to cable providers such as Comcast Corp., which functions local ads from marketers such as car dealerships and personal injury lawyers.
While Maureen Bosetti, chief partnerships officer at the ad-buying firm Initiative, stated her team is still arranging through what YouTube TV will mean for clients, she spooked that Google’s motivation is clear.
“They do want to take TV money,” she stated. “They want to play in the TV space.”
YouTube TV will be accessible across the U.S., allowing it to vend ad inventory on a national basis, unlike cable operators that have geographic limitations. Plus, it should be able to use better targeting technology and massive reams of consumer data to deliver ads to particular audiences. It’s an opportunity for Google to start experimenting with selling linear TV advertising and potentially shown it can do so much better than others.
“As TV shifts from linear feeds to streams, we observe an opportunity to improve the ads experience for everyone,” stated Neal Mohan, YouTube’s chief product officer.
Vending ads for the streaming service may also offer the side benefit of giving YouTube more reliability with marketers and helping them remove the stigma that its videos aren’t the same quality as TV. That could draw more advertisers to the main YouTube site, stated Ms. Bosetti.