Troubles on YouTube Causing a Shift in Ad Dollars

The world has problems; social media tends to make them worse. Wired recently ran a story focused on pedophiles using YouTube to find content. The story is making waves with significant advertisers like AT&T, Disney, Hasbro, Epic Games, and Nestle, all of whom have vowed to remove their advertising dollars from the platform until Google, YouTube’s parent company, fixes the issues. Google claims they are banning accounts and working with NGOs to fight this problem.

What does this mean for YouTube from an advertising perspective? Having run major ad programs for brands and the government, I can tell you this: when a client asks you, mid-program, to shift ad dollars from one application to another you typically go to a platform that has excess inventory. Google Display and search always has extra inventory.

Why It Matters

Adweek has been talking about the current shift from Facebook to Instagram in advertising dollars. The change is due, in part, to the perception that Facebook is not operating with the public interest in mind. Anyone who runs ads laughs because Facebook will make more money because of how ad targeting works on Instagram vs. Facebook.

YouTube has established an easy to use video sharing platform that reaches a growing audience from a combination of factors including cord cutters, mobile streaming, and set-top box integration. In the past, brands would not advertise with outlets they viewed as toxic. Since YouTube is a mix of user-generated content and social interactions, the platform is susceptible to toxic content.

Like “fake news” and Facebook, Google has a difficult time moderating content on the YouTube platform. This means that brands who choose to advertise or host content on YouTube can inadvertently have their brand linked with unpleasant or even grotesque themes.

If YouTube was a more traditional media outlet, brands would demand that the outlet change its content/advertising policy.

Do brands have the power to make Google change? Sadly, no. YouTube has several factors working in YouTube’s favor:

• Brands NEED to reach YouTube’s users
• Cord cutters continue to increase the need for digital video ads
• Dollars shifted away from YouTube will more than likely go to another Google property
• Advertising agency model incentives the simplest solution

Clyde Insights

The last point focused on advertising agency models is the primary issue. Most ad agencies work on a commission-based model. Once you get an ad platform up and running, every hour you spend optimizing, pausing, or just tweaking it in any way; the companies lose money. Client service dictates you do this, but it doesn’t always happen.

Why is this important? Google knows all these things. Google knows brands need their user-base. Google knows it holds the lion’s share of online advertising. Most importantly, it knows it has trained advertisers to use Google’s platforms most efficiently. Finally, it knows that people will complain, shift dollars, but ultimately come back to the systems Google has created.

No single brand, or even a loose coalition of brands, has the power to force Google into action. Sure, significant brands can pull out dollars, but with the bid/placement system that Google has created, ten more brands are willing to advertise in any new open inventory. Once negative press has dissolved around this issue, brands will more than likely return to YouTube.