After 11 Years in Digital Video, YouTube Wants to Take on TV-Sized Budgets

After 11 Years in Digital Video, YouTube Wants to Take on TV-Sized Budgets

Beauty vlogger Rachel Levin recently surpassed 1 billion views on the platform. Joshua Pestka Fotografia de: Joshua Pestka

It isn’t always easy to pair up the suits of the marketing world with those freewheeling kids that make the buzziest videos in the digisphere. The two sides—and more importantly, their respective brands—must have chemistry. So last July at VidCon, the annual digital video conference held in Anaheim, Calif., YouTube set up a “speed dating” event, hoping to play matchmaker between advertisers and creators. Among the talent mingling with marketers was Rachel Levin, a rising beauty vlogger who immediately hit it off with the people behind the anti-smoking initiative Truth.

“She wasn’t originally on our radar,” admits Justin Hooper, group creative director at 72andSunny, the agency handling Truth.

She’ll be on just about everyone’s radar this week at the Digital Content NewFronts in New York where YouTube will pitch Levin and other charismatic stars from its creators’ stable at its Brandcast event. Levin, though still a relative unknown, seems like an easy sell—she’s recently entered rarified YouTube air by passing the 1 billion view mark. What’s more, her YouTube subscribers have shot up from 1.9 million to 7.6 million in the past year, and her videos get watched 3.5 million times per week.

Such numbers are why Truth execs cast her for their “It’s a Trap” campaign after learning that, in her personal life, she had little patience for cigarettes. “She had so much enthusiasm and believed in the brand so much [that it] seemed like a total no-brainer to use her,” Hooper says. The commercial has been viewed 6.5 million times (a big number for a PSA) on YouTube since August.

Levin’s secret to success is “only putting out content that I’m super proud of,” she says. “I know what videos my audience likes to see, and I’ve maintained a good connection with my audience.”

On the business level for YouTube, connecting brands to up-and-comers like Levin and her peers—there’s always a need for fresh faces in this business—is central to its burgeoning Google Preferred program. Google Preferred lets marketers buy unskippable pre-roll ads purely against the highest-performing YouTube stars—it will be front and center at Brandcast for a third consecutive year.

While YouTube remains the biggest digital video player on the scene, its goal of chipping away at big, traditional media budgets is particularly important this year. That will be the talk of the NewFronts—especially since Facebook, Snapchat, Twitter and others are also taking serious aim at TV dollars. “If we look at previous years, we saw [advertisers] make a lot of decisions for traditional media upfront and then afterwards look at digital and YouTube,” explains YouTube CEO Susan Wojcicki.

Not anymore. EMarketer expects digital advertising to surpass TV spend for the first time next year, accounting for $77.4 billion—or 38 percent of spend—compared to TV’s predicted $72 billion (36 percent).

“What we’re seeing this year that’s new and different is that we’re being considered right alongside TV—I think this shows some of the change in the market,” Wojcicki says.

On the surface, YouTube’s strategy is intentionally simple for brands chasing millennial cord-cutters. It promises to reach more 18- to 49-year-olds than any TV network on mobile alone. (That boast has grown—last year, YouTube stated only it reached more mobile viewers than any cable network, not broadcast.)

Several under-the-hood changes over the past year, agency and brand execs say, are keeping YouTube’s data game ahead of Facebook—chiefly, better viewability metrics, new programmatic buying options and access to brand and sales-lift metrics.

To quantify the progress, Wojcicki and her team offer several impressive, hot-off-the-spreadsheet numbers. For instance, in 48 out of 52 Google Preferred campaigns measured, the average video promo boosted ad recall by 80 percent. Sixty-five percent of campaigns lifted brand awareness by an average of 17 percent.

Also, YouTube reports that time spent on Google Preferred channels is up 60 percent, and the number of advertisers in the program has doubled in the past year. Within Google’s top 100 advertisers, spend is up 50 percent across YouTube programs.

“The first year or even Year 2 that this launched, it was a lot of advertisers and agencies buying into the concept—[but] it was [also] a bit of a leap of faith in terms of what results it would deliver,” acknowledges Tara Walpert Levy, Google’s managing director of agency sales. “Now, almost all of them have research reports that tell them how well the platform is working, and many of them have taken advantage of our brand lift tool.”

In November, Google began letting advertisers vet their stats through third-party measurement companies like comScore, Moat and Integral Ad Science—instead of taking only YouTube’s numbers into consideration. As a result, 91 percent of YouTube’s ads are considered viewable under the Media Rating Council guidelines, which constitute that advertisers only pay if 50 percent of a video ad loads within two seconds. Marketers are also getting more access to performance numbers such as brand awareness, ad recall and, most recently, sales-lift metrics that track to see if a video drove an in-store purchase.

With those changes complete, YouTube plans to let marketers execute their Google Preferred commitments via its programmatic system, starting at the NewFronts. Agencies will be able to plug first- and third-party data into campaigns that run through Google’s DoubleClick Bid Manager platform—like they already do when purchasing YouTube’s skippable TrueView ads.

Brandon Rhoten, vp of advertising, media and digital for Wendy’s, for one, is a believer in the big picture of what YouTube is doing. “Really, it’s taking it into terms that are common marketing language,” he says, “things like ad recall, lift and purchase intent.”

When Wendy’s wanted to show patrons where the ingredients in its salads come from, it strapped a GoPro onto a head of lettuce in the ground and followed it until it ended up in a Wendy’s restaurant. Google Preferred and TrueView ads amplified the video. The result? Seven million views, a 65 percent boost in ad recall and 146 percent more Google searches for Wendy’s.

“People don’t believe that a fast-food joint is actually taking time to produce salads,” Rhoten says. “But if you show it, they will actually believe it.”

Another YouTube advertiser, Ed McLoughlin, global head of digital and media at HP, says the video giant’s data blow its competitors away, including Facebook—specifically when it comes to the number of people who watch the full commercial. “When you think about completion rates, which is a proxy for engagement in my mind, our rates on YouTube are 80-plus percent versus on Facebook or Instagram, where you see it in the low teens,” he explains. “The key is, there’s content on the other side of this ad unit that people are willing to invest the time to go through the ad to see.”

To convey all of this to the marketing world, YouTube has quietly starting hosting agency-exclusive workshops with the world’s biggest media shops to educate them on the ins and outs of the platform.

It’s the next evolution of YouTube’s Brand Partner Program, which launched in 2013 to give marketers such as Samsung and Taco Bell the tools, resources and access to creators needed to crank out buzzy clips. Up until now, agencies could only attend with a client and a specific brief. Now workshops are aimed at educating various agencies about more specific data and insights on how to use YouTube—with a strong focus on the talent available via Google Preferred.

“Once you’re more familiar with the platform and the unique way that the creators are connecting with their fans, and the way that audiences are communicating, it creates all of these additional ideas and opportunities about how to invest even more deeply in creative and think about going beyond how the platform has been used to date,” says Google’s Levy.

In April, Dentsu Aegis Network became the first agency group to participate in the initiative via events in Paris and New York. A third workshop is planned in Sydney, Australia, later this month.

Shannon Pruitt, head of Dentsu Aegis’ The Story Lab, organized the recent Manhattan event to give media buyers from Carat, Vizeum and Amplifi some hands-on experience with content marketing. “The people sitting in the room get the best of both worlds, so that they can have a well-informed and educated opinion and approach when they’re talking to their clients,” she says.

In a way, it’s a bit surprising that YouTube—the dominant player in digital video for a decade—is just now looking to make stronger relationships with agencies. Facebook has been making waves in that regard for half a decade.

“YouTube has a history of more expertise in the video space, but they’re not being as aggressive about marketing it,” explains Topher Burns, group director of distribution strategy at Deep Focus.

At the same time, the move to cozy up to advertisers shows how it’s under increasing pressure from Facebook, Snapchat and Twitter—especially in the burgeoning mobile space.

During Dentsu Aegis’ workshop in mid-April, around 20 staffers huddled in Google’s office in New York’s Chelsea neighborhood to talk through the steps of building a YouTube campaign, from creative and distribution to the do’s and don’ts of working with influencers.

The YouTube team also presented data from its 10-month project called Unskippable Labs, which works with marketers to test which types of creative best grabs a consumer’s attention. Mountain Dew, for example, found that a 90-second video made specifically for mobile had a 26 percent higher view-through rate than two versions of a 30-second spot.

“Since it was made specifically for mobile, was there a test between vertical and horizontal?” asks a Dentsu staffer during the presentation, referencing, of course, Snapchat’s influence in making vertical video hugely popular over the past 18 months.

In fact, no, Mountain Dew’s video was not tested vertically because it repurposed edits from a traditional TV ad format.

While the question may seem inconsequential, it speaks volumes about YouTube’s ongoing turf war with Facebook and Snapchat as more video consumption moves from websites to apps. That’s one area that some execs say YouTube has struggled with.

“You’ve got to be a key app to earn engagement or traffic—Snapchat’s done a fantastic job with becoming one on the shortlist of key video apps,” says an agency source that spoke on the condition of anonymity. “Facebook obviously is dominating mobile time from an app standpoint. I don’t think YouTube is yet to really earn that spot on that first screen.”

YouTube doesn’t break out daily video views, but says that watch time is up at least 50 percent year over year, with more than half of that traffic coming from mobile. Meanwhile, Facebook claims that its users watch 100 million hours of video every day, while 10 billion videos are consumed each day on Snapchat.

Just last week, YouTube launched a new pre-roll ad that caps the length of a commercial at six seconds, which is geared at getting marketers to push the creative envelope with mobile.

But is YouTube keeping pace with Facebook’s innovations? The latter has made a big push to educate agencies on best practices in creating videos that utilize the platform’s specific features like autoplay and bite-size Instagram clips. As an example, it recently wrapped a tour of 11 creative agencies for daylong workshops—it also has a program called Blueprint that provides agencies with online courses and best-practice tips.

“What we’re trying to do is develop ideas and campaigns to drive value for the business and have value to people,” notes Mark D’Arcy, CCO of Facebook’s Creative Shop. “The good thing is, every single week there’s some new adaptation—there’s live video, there’s 360 degrees, there’s canvases—some new way that we can put things in front of people in an engaging way.”

Live video and virtual reality are two areas in which YouTube has lagged while Twitter and Facebook proactively pitch them to marketers. “I think you’ll see YouTube work to close that gap, but they have a while to go,” contends Noah Mallin, MEC North America’s head of social.

Virtual reality is certainly on every marketer’s mind and will likely be the next battle front. Facebook’s $2 billion baby Oculus Rift opens up a whole new world of immersive storytelling. While Facebook has made it clear that Oculus is part of its long-term video bets, marketers have already gotten their first peeks at Facebook 360 videos in the past six months.

“When you have a meeting with Facebook about video, they’re always trying to push you to do a 360 option,” says Deep Focus’ Burns. “They’re actively marketing the exploration that they’re doing—very public, very flashy bets that YouTube isn’t necessarily making such a big deal about. They’re kind of winning this perception war about pushing the boundaries of the future of video.”

YouTube has answered with its support for livestreaming 360-degree footage, a feature unveiled two weeks ago. “It’s simply a competitive thing,” Wojcicki says, when asked about such new, shiny objects happening in the digital video space.

For right now, the YouTube CEO seems more focused on where serious cash is already in play—particularly on siphoning TV budgets.

“We’re growing 50 percent year on year,” she proclaims. “We have for the last three years, and so far we basically just see lots and lots of opportunity for us to continue to grow the market.”

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