How & Why Madison Avenue Is Killing YouTube (and what it can do)

Call it a subtle scent at this week’s Ad:Tech in NYC… Lots of discussion of online-video, even if not in proportion to online-video’s growing importance to the online-marketing mix. More interesting, however, is that most conversations didn’t use the two words: “you” and “tube.” People talked about contextual targeting, video-advertising networks, and even facial recognition.

Even though every attendee received a free Fast Company that featured YouTube influencers, the words “You” and “Tube” weren’t muttered except in disgust. Even Google’s mainstream booth didn’t showcase YouTube. WTF?

Why? How was it that people would only discuss YouTube when I brought it up? And why was all the feedback negative:

  • They’re not selling inventory well. They’re not even making it easy for us to buy it.
  • They don’t understand the role of the agency because they’re used to getting money through electronic bids.
  • YouTube sees agencies as unimportant middlemen between them and THEIR customers
  • If you don’t have $40 million, they won’t customize things for you.

The “Madison YouTube Snub” wasn’t about the proximity of ads to “consumer generated content,” or about metrics or targeting. It was simply that agency buyers (as haughty as I know they can be) aren’t being treated well.

What YouTube is missing is the “Great Irrationality of Marketing Spending,” something I’ve grown to understand even if I disdain. I’ve seen it closely from all three perspectives: as a content creator, a buyer, and an intermediary. While we direct-response oriented marketers (the ones who track A/B campaigns on Google OCD style) are about results, the vast majority of advertising spending is not rational or performance driven. There. I said it. Try to refute that fact.

I’m not suggesting that media buyers are behaving recklessly or spending without consideration of their client’s money. But I do know that when confronted with a new medium with unclear metrics, they buy based on a) what’s easy, b) what they understand, and c) relationships.

I know how devalued my 4-6 million monthly views on YouTube are, and how the cost-per-view is horrifically low. So this article is a bit biased. But I also know I can’t solve that myself… it’s going to take some improvements in San Bruno. I would typically provide this advise without public fanfare as “not to bite the hand that feeds me.” I wouldn’t have an audience without YouTube. But I owe it to myself and fellow creators to help YouTube solve its biggest problem: poor monetization of traffic.

So here are 7  tips for YouTube to win back the hearts and dollars of Madison Avenue.

  1. Be Nice. You don’t have to contort your business model to fit advertisers, but at least show them love.
  2. Know Your Customer. It’s only partially true that the big brands are your customer, Google. Don’t negate the influence of the agencies on how that spending is partitioned. Even the smartest and well-intentioned marketers defer to media buyers. Marketer have two years to chase ROI and can’t possibly get into the weeds of one medium — much less one property.
  3. Teach Google sales people about YouTube. They simply don’t understand how to sell display advertising, much less video. It’s really quite sad.
  4. Educate. As market leader, it’s Google’s responsibility to set metrics, validate the medium, and educate buyers AND key influencers. Don’t expect logic to prevail, or it will be 2012 and Madison will have jacked up competitors. If I don’t see some ROI studies in 2011 published by YouTube and Forrester, ComScore, TubeMogul, Jupiter, eMarketer, or whoever… I’m going to show up to San Bruno with poop on a stick.
  5. Create an East Coast sales office for YouTube. Do it now. YouTube is floundering in silly pods, and there’s not enough pretty faces greasing agency palms. I resent it too, but it’s how dollars flow.
  6. Decentralize. Agencies do a lot of stupid things, but they know the importance of small. Google is too layered to move in the agile way that’s required of new media, and it’s killing itself.
  7. Get Creative. You don’t need to accept ad units that piss of your viewers, which is a more important stakeholder than advertisers. But explore new options, partner with greater trust, and don’t expect video to be monetized with the simple standards of your cash cow (paid search).

Any other tips? Or are you just gonna hope it takes care of itself?

Can Google Sell Online Video Ads?

There’s been a lively debate recently among online-video enthusiasts about Google/YouTube’s capacity to sell display advertising. Sales people need different skill sets selling paid-search (automated, measurable, bid-based) versus display advertising (which is less measurable and more like selling television or print). To understand the distinction, see Google’s video; this is something we’ve been exploring at WillVideoForFood since Google bought YouTube in 2007. While Google has deep relationships with top companies and industries, it has only recently put emphasis behind non-search advertising.

YouTube’s display team (a few dozen) is rather small, and most YouTube ads are sold via Google Adwords not the dedicated team. While the display team sometimes lands some comprehensive ad buys with advertising agencies and brands, most monetization on YouTube is marginalized. The CPMs (cost per thousand) are so disappointing to some creators and online-video studios that some (from Next New Network and Revision3 to TheStation) have begun to sell their own inventory, or partner with ad networks that can attract better monetization for their views. Increasingly YouTube has provided creators and intermediaries tools to sell their inventory directly.

That said, there was some encouraging news from Jonathon Rosenberg, Google’s SVP for product management. According to this eWeek piece titled “Google YouTube, Android Drive $3.5B in Ads.”

Google’s display ad business… operating at an annualized run-rate of $2.5 billion. That’s counting YouTube ads, and all non-text ads running on Google’s network and DoubleClick networks, Jonathan Rosenberg, Google’s senior vice president of product management, said on the Q3 earnings call. “You guys always ask me (referring to analysts)… where’s your next multi-billion dollar business after search,” Rosenberg said. “There’s your answer.”

Media Buyers Remain Afraid of UGC & Chupacabra

Advertisers continue to fear user-generated content (aka consumer-generated media) and Chupacrabas, according to an eMarketer report. Instead of contextual ads or sponsorships, buyers are sticking with 30-second pre-roll ads that reduce purchase intent compared to control.

Media buyers prefer online video advertisements (versus sponsorships or branded entertainment) because “viewers dislike or distrust video advertising—even though they freely accept television commercials.” David Hallerman, who wrote the report, says that distrust is what wins over digital buyers who overlook the reduced intent test/control data because the CPMs (cost per 1,000) are irresistibly cheap, and media buyers can’t resist a deal.

“Even on their personal time, a good media buyer can’t overlook a sale,” eMarketer’s Hallerman said. “I have a neighbor who is a senior digital media buyer, and he purchases randomly sized dresses and skirts at Loehmans each weekend.” Hallerman added that despite his neighbor’s peanut allergy, he can’t resist the Jiffy “buy one, get the other 50% off“sales. But, Hallerman added, “He’s certainly financially disciplined enough to resist the paltry 25%-off sales.”

Chupacabra Sightings at Major Digital-Buying Agencies Have Created Near Hysteria.
Chupacabra Sightings at Major Digital-Buying Agencies Have Created Near Hysteria.

“Like last year’s study, media buyers remain afraid of the dreaded Chupacabra,” says to Hallerman. “Many of the top digital-media buyers we interviewed at such leading agencies as Digitas, Avenue-A Razorfish, OMD, UMI and even Scient and Viant are terrified of the goat-sucking beast. This is especially true of those Puerto Rican people, whose fear rose from 18% to 37% from 2008 to 2009.” Hallerman believes the Cupacabra threat may have originated via sales representatives of advertising networks and large media properties, who wished to keep their buyers safe.

“More than 78% of media buyers are taking protective measures against consumer-generated content and Chupacabra attacks,” says Hallerman. “It’s not very different from the swine flu, except that the swine flu actually exists.”

“In my country, many beautiful media buyers would having look at consumer-media,” said Marcos Sanchez of Cerebro Muerto Digital (CMD). “And they no coming back from night after Chupacabra eating their blood.” Sanchez said, under promise of anonymity, that CMD invests no less than 30% of its client’s digital media budget on low-cost inventory on websites that have not been operational in five years or more. “We finding on professional sites like “The Daily Reel” that they video prerolls get 500,000 impressions daily and viewers very, very engaged in banners with 94% recall.”

So… umm…. I’m kidding about only some of that. The preroll is all the rage,  while WVFF has showed how sponsored videos have measurable ROI. Did I ever mention on this blog that you can’t get reach without advertising near UGC (user generated content) because the VAST majority of views are of vloggers, YouTube stars, viral hits… not Hulu shows. Did I ever mention on this blog that you can actually pay a YouTube star a small amount of money to make a funny video about your product that you approve?

Anyway, some other key points for those that see online-video marketing as digital ads only:

  1. A 30-second preroll is not as effective as a 5-second preroll and lower 1/3 ad. In fact, purchase intent goes DOWN due to 30-second prerolls as compared to a control!
  2. People under 30 are far more likely to find an ad funny, emotionally touching or informative (3 proxies of purchase). Is that a function of their familiarity with the medium or the fact that many campaigns are targeting them?
  3. Below are other topics the full report hits. Feel free to send me a copy if you buy one. I can’t find a spare $700 of change in my couch. Plus they never interview me for these, so they can’t be that informative. Moo haa.

  • Why do many people distrust online video advertising?
  • What can advertisers do to overcome that obstacle?
  • Can social media and video advertising be an effective mix?
  • What ad methods are needed with short video content?
  • Is the online video audience as large as it appears?