Recently YouTube announced it would be phasing out the sale of YouTube inventory on the DoubleClick exchange. This obviously makes a lot of 3rd party media dealers upset but they are doing it for a good reason.
As someone who has spent the majority of his career in digital helping content creators earn what they deserve this makes a lot of sense to me and here’s why.
When you run on exchanges there are all kinds of 3rd and 4th parties in the mix. This always negates quality due to lack of control. As a brand, YouTube is aiming for TV Budgets which are quickly moving to digital outlets. Having complete control of their platform and who’s buying what makes sense when you are moving to a more brand dollar driven system. The current ad spend for TV is around 70 billion dollars, so that’s a pretty big pie and even just having a small slice is incredibly profitable. Smart businesses are preparing for the massive movement of these dollars from standard television to digital outlets (which to be fair started a long time ago.)
Google, has more than 1 billion unique video views a month and people are uploading over 300 hours of video every minute. So not only does YouTube have the ability to track users habits and viewing rates, drop offs, etc. they also have the largest pool of available content AND the largest audience. It only makes sense to leverage an audience like that in order to sell targeted brand advertising.
Essentially what’s happening is that YouTube is becoming a “premium” advertising destination for digital video. This could mean a few different things to a few different types of businesses.
First – any of the media buying firms using exchanges will be hurt by this. If you’re a company who’s a middle man for YouTube via AdX or DoubleClick exchange you’re losing that source of inventory. Luckily there are a lot of new sources of digital video popping up so these firms won’t be completely left out in the cold.
Next – content creators. This is actually great news for YouTube filmmakers. If you have a large audience and are putting out interesting video that drives views you should see an increase in your earnings as more brand dollars begin to flow into YouTube. Higher CPM’s should also result from the lack of 3rd party players in the system and a more exclusive environment. So it’s really great for the content creators that use YouTube as it should mean increased revenue.
Finally – advertisers. Advertisers are now going to have a premium environment to buy targeted video impressions. If you’re Nike and you want to buy ads on sports content you can microtarget right down to the age demo and gender. Nike buys a lot of media that targets high school age demographics so they can buy into local high school athletics channels and other youth sports outlets.
All in all, this is the type of publisher centric move that drives media prices up for the content creators and gets them more high level and respectable brand advertising – which in some cases, if you’re not a complete cynic – can complement a well put together video production.