How YouTube Can Overcome the Strategic Threat From Facebook

How YouTube Can Overcome the Strategic Threat From Facebook

Dear Susan Wojcicki, congratulations on the birth of your fifth child, your first anniversary as CEO of YouTube, and the upcoming celebration of YouTube’s 10th birthday. We still haven’t met, but I’m the ReelSEO videologist and columnist who wrote a year ago, “Memo to Susan Wojcicki: YouTube Needs its Own Sales Force NOW.”

Back then, I said, “you will face several strategic challenges as the head of YouTube. You need to figure out how to significantly increase the number of advertisers who are using TrueView in-stream ads as well as dramatically increase the amount of money they spend on YouTube. And an awful lot of ‘amazing creators’ and YouTube Partners are hoping that you can help them build a sustainable career on YouTube and beyond. But the biggest battle you will face will be internal. To increase the number of advertisers as well as dramatically increase the amount of money they spend, YouTube needs its own ad sales force.”

Well, here we are a year later. And, according to the recently updated Statistics page on your website, you’ve made significant progress in the past 12 months. But, your many accomplishments appear to be overshadowed by the strategic threat you now face from Facebook videos. So, before I reiterate why you need your own sales force now more than ever to counter the threat from Facebook, let’s review your latest statistics:

Thoughts on YouTube’s 2015 Product

How YouTube’s Advertising Model is Shaping Up For 2015

  • More than a million advertisers are using Google ad platforms, most of who are small businesses. So, what has Google’s ad sales force done in the past year to get more of these advertisers to start using YouTube?
  • 85% of YouTube TrueView in-stream ads are skippable. This is YouTube’s strategic advantage over Facebook. Does Google’s ad sales force talk about this when calling on advertisers and agencies, or do they talk about better brand engagement with display formats?
  • Google Preferred has been a successful business model for the company. This demonstrates that Google’s ad sales force can sell the top 5% of YouTube’s most popular content in areas like food, music and entertainment. But, who is trying to sell top agencies the other 95% of YouTube’s content?
  • Top YouTube creators are more popular with U.S. teens than many film and TV celebrities. That’s wonderful, but why is this listed here under Advertising instead of below under Investment in Top Creators?

YouTube’s Investment in Top Creators

  • YouTube Partner revenue is up over 50% from 2013 to 2014. This is great news. Why is it buried on YouTube’s Statistics page instead of being touted in a post on the Official YouTube Blog or the YouTube Creator Blog?
  • We’ve been investing in our creators by opening YouTube Spaces in LA, London, Tokyo, New York, and San Paulo. This is also great news that deserves to be mentioned in a post on the Official YouTube Blog or the YouTube Creator Blog.
  • Launched promotional campaigns in 7 countries for top creators on YouTube, increasing awareness for those creators by up to 4x. See my June 2014 column, “Did YouTube’s Own Advertising Campaign Pay Off For the Site?
  • Of the 100+ channels we funded in 2011, 86 are still in the top 1% of all YouTube channels. That’s great. But in October 2012, Robert Kyncl, your VP and Global Head of Content, announced a second generation of more than 50 original channels coming from France, Germany, the UK and the US. What’s happened to them?
  • More than a million channels are earning revenue from the YouTube Partner Program. A quick search across Tubular Labs’ 2.3 million creators reveals 21,000 are already generating 1 million views or more per month. So, the vast majority of YouTube Partners still can’t build sustainable careers on YouTube just yet, unless they can find new ways to monetize their videos.

Why YouTube Needs its Own Sales Force Now More Than Ever

This brings me back to the advice that I offered a year ago: “YouTube needs its own ad sales force.” As the data above shows, Facebook videos represent a strategic a threat to YouTube. So, why can’t YouTube count on Google’s ad sales force to counter this latest threat?

Let me illustrate why by sharing part of an infographic that was published in August 2013 on Think with Google. Called “Flipping the Funnel: From Exposure to Engagement,” it says:

Historically, media planning has focused on exposure, but new media solutions give marketers the ability to prioritize engagement. By focusing first on those most likely to care, brands generate insights and mobilize advocates to make their whole marketing plan better. In the old (exposure) model, most communication is one way. As a result, brands must reach lots of people and then winnow them down to the consumers who matter most. In the new (engagement) model, brands invite their audiences to take part by interacting, commenting, sharing and creating. Brands get real-time feedback when ideas resonate and audiences help spread the message.

Now, Google’s ad sales force is organized into two groups – one which is focused on brands, where it sees huge growth potential, and the other on performance ads, where it already dominates. In other words, one group is selling exposure the same way that Facebook is selling Premium Video Ads, which is similar to how advertisers already buy and measure ads on TV. Facebook’s video ads are bought based on Targeted Gross Rating Points to reach a specific audience over a short period of time. Delivery is measured by an independent third-party, Nielsen Online Campaign Ratings (OCR), and advertisers only pay based on what Nielsen OCR measures.

Unfortunately, Google’s brand advertising group combines YouTube’s online video business with Google’s display ad network and its social network Google Plus. This means no one is really focused on YouTube’s strategic advantage over Facebook – 85% of TrueView in-stream ads are skippable – which is much more valuable if you are focused on engagement. In other words, a Google ad sales rep who needs to sell display ads as well as YouTube ads can’t afford to flip the funnel to take on Facebook.

In short, Google’s brand advertising group is currently structured, trained, and incentivized to sell the top 5% of YouTube’s most popular content the same way TV was sold in the second half 20th Century and the same way that Facebook is selling Premium Video Ads now. Although Google provides tools, tips and resources to help do-it-your-selfers get started with AdWords for Video, Google’s performance advertising group is focused on selling just AdWords … without YouTube.

Neither Google nor YouTube can afford this lack of focus on engagement if they want to successfully counter the strategic threat posed by Facebook videos. The threat that Facebook videos represents to YouTube is serious, and YouTube can’t take any half-way measures if it is going prevent Facebook from cutting off the ad revenues that YouTube and its partners so desperately need.

YouTube, you need your own ad sales force if you are going to be successful “flipping the funnel” from exposure to engagement.

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