YouTube Google is hoping its big YouTube names like Zoella can help it price its ads at a similar rate as those of TV shows.
Right at the end of Google’s Q3 earnings call the company revealed it was ramping up its latest strategy to steal advertising money from broadcast TV networks. It will do this using the same method broadcasters use to secure millions of dollars in upfront advertising deals.
Over the past two years Google’s YouTube has held “Brand Cast” and "New Front" events across the world, showcasing its brightest content, throwing a glitzy party, and then holding negotiations with the world’s biggest brands and ad agencies in the hope of securing millions of dollars in advertising commitments.
Brand Cast and New Fronts mimic the “upfront” events TV broadcasters have run for decades, where they too hold fancy events for advertisers and media buyers, which take place in the spring to showcase their most attractive programming in the fall. The idea is to create a short, sharp window for advertising sales in which advertisers feel forced to lock in the best deals they can. That system has kept prices for TV advertising high (even though advertisers can feel as if they’re locking in discounts because they’re buying in bulk.)
In April, Google launched “Google Preferred,” a new ad package whereby brands pay a premium price to place their ads on YouTube videos the company deems to be in the top 5% of quality for sections like Fashion & Beauty and Food.
This method of packaging up its digital property like TV in the hope of bringing the price of digital advertising more in line with TV ads appears to be paying off.
Omid Kordestani, Google’s newly appointed chief business officer, said on the Q3 earnings call that the company had signed upfront commitments with major brands like General Motors and Coca-Cola and the world’s biggest media-buying agencies: IPG, OMG, Digitas, Carat and SMG.
In the US, Google says the Google Preferred option is now “nearly sold out” (remember that short, sharp window of limited availability to keep prices high).
I think we’re going to definitely continue working on this. If you look at our history, we’re very used to the selling model that was all about performance [i.e. not brand advertising that commands more revenue]. And then as we added properties like YouTube and Brand and Mobile, we’re … gaining a better understand of how to work in this upfront process …
We’re just going to continue getting better at [figuring out] how to package this inventory better and then the tools that are needed, and then on the selling side, just get better at also working with the agencies and our advertisers and marketers to get this type of selling right.
Google has long been touting how its properties are fast becoming the go-to branding platform, to the detriment of TV. In April, Google’s former chief business officer Nikesh Arora said the marketing industry was at a “significant industry moment” in which marketers who historically built their brands on TV were “reorienting” their creative, planning, and investments, with digital at the center.
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