With millions of daily users in the Netherlands alone, YouTube is of great interest to advertisers. With the rise of influencers and professional parties posting content on YouTube, the platform is now much more than a gathering place for amateur videos.
It has become a full-fledged online video channel, where virtually every target audience can be reached. To remain attractive to advertisers, new forms of advertising are being added all the time. However, the latest option might be against the user's grain. Is this a threat to the platform, or just a thoughtful choice?
New non-skippable ad form
YouTube makes money by showing ads. YouTube ads come in different shapes and sizes, but the most famous variant is the Trueview video. Prior to your chosen video, it first plays an ad that you can skip after 5 seconds. For both advertisers and users, this is a great option. The user decides whether to watch the ad, while the advertiser only pays when the video is watched for at least 30 seconds (or fully watched if the video is shorter than 30 seconds).
Most YouTube ads are sourced through the Google Ads auction. Within this environment, a new option has now been added, the non-skippable 15-second video. It is now possible for advertisers to insert a 15-second commercial that the user cannot skip. The choice to watch the ad or not therefore no longer lies with the user.
Non-skippable ads on YouTube are not entirely new. For example, you could already purchase non-skippable ads through RTL from the YouTube channels of the RTL programs, or reserve a certain number of guaranteed video views through a Google sales agent. However, now that it is becoming available via auction, it is much easier for advertisers to deploy this. As a result, it will become increasingly common for users to be "forced" to watch a full ad.
Motif of YouTube
As a user, it is nicer if you can decide for yourself whether you want to watch a commercial. YouTube thus takes the risk of dissatisfied users with this. But then why are they coming up with new disruptive ad formats?
Since YouTube makes its money primarily from ads, it is important that they be attractive to its advertisers. On other video platforms it is also possible for advertisers to show pre-rolls that cannot be skipped. In the Netherlands, think of ads prior to (or during) episodes on RTLXL, KIJK or NPO Start. By now offering this option via auction on YouTube as well, they hope to become even more interesting for advertisers, which should lead to additional revenue.
YouTube explores new business models
In addition, YouTube may be somewhat deliberately "annoying" users with ads. YouTube now has such a strong position that users do not simply walk away from the platform. After all, there is no good alternative (yet). For users who have grown tired of the ads but still want to continue using the platform, there is now YouTube Premium. For a fixed monthly fee, you can use YouTube without ads. In addition, you can use additional services such as Google Music (similar to Spotify) and YouTube Originals (similar to Netflix Original series).
YouTube Premium has been increasingly actively promoted lately. The addition of longer non-skippable ads may be a new way to push people toward a subscription. After all, this will earn YouTube significantly more.
Assuming an average CPV of 3 cents per ad watched, you would have to watch 400 ads a month to generate the same return for YouTube as an $11.99-a-month subscription. Not surprisingly, YouTube is making attempts to get people to subscribe. However, it remains to be seen whether people will sign up for a YouTube account in addition to all the other subscriptions, or whether they will continue to take the ads at face value.