YouTube Ads Aim at Cord Cutters

YouTube wants to siphon off more advertising dollars out of the traditional TV ecosystem.

Google’s video platform is promising Madison Avenue new ways to reach people watching YouTube on TV screens — as well as target YouTube ads to cord-cutters and consumers who don’t watch a lot of traditional TV.

YouTube says connected TVs represent its fastest-growing device category, thanks in part to the growth of YouTube TV, its over-the-top “skinny bundle” pay-TV service launched last year.

While overall mobile accounts for over half of all YouTube videos viewed, users now watch more than 150 million hours daily of YouTube on television screens worldwide. That’s up 50% from 100 million hours per day in the past six months. (One year ago, total viewing on YouTube was around 1 billion hours per day; Google declined to provide an updated figure.)

“We are seeing more YouTube being watched on TV screens, and more TV content being watched on YouTube — it’s the ultimate convergence of video,” said Debbie Weinstein, managing director, YouTube/video global solutions at Google. “Advertisers are saying, ‘What are you building for me to reach YouTube viewers on TV?’”

Here are the three ad programs YouTube is rolling out:

“Light TV viewers” targeting:

In the next few months, YouTube will introduce a new audience segment in AdWords called “light TV viewers.” These are consumers who, based on Google and YouTube’s metrics, watch most of their TV and video content online — and are much less likely to subscribe to pay TV.

YouTube on TV screens:

For the first time, advertisers will be able to reach audiences specifically on television screens through AdWords and DoubleClick Bid Manager. That option will join the existing ability to target YouTube viewers on smartphones, tablets, and desktops.

YouTube TV ad inventory will be available through Google Preferred: So far, Google hasn’t sold ads for its OTT “virtual pay-TV” service. Starting in the fourth quarter of 2018, inventory on some U.S. cable networks on YouTube TV will be available as an extension to Google Preferred, the premium ad program for the top 5% most popular YouTube channels.

The “light TV viewers” targeting — which will span ads across all device platforms — is particularly interesting to advertisers who are trying to reach audiences that have become very hard to find on conventional TV, Weinstein said. More than 50% of U.S. consumers aged 18-49 in U.S. are “light” TV viewers (in the bottom one-third of the total TV audience based on minutes viewed), according to Nielsen. However, 90% of that group watches YouTube videos, according to Weinstein.

Meanwhile, Google is looking to dial up the ad monetization on YouTube TV. First launched in April 2017, YouTube TV is now available in 99 of 100 top U.S. designated market areas, reaching some 85% of the nation’s TV households. As you’d expect, most viewing of YouTube TV is on TV, with television screens accounting for more than 70% of the total watch-time.

Starting later this year, YouTube TV ad inventory will be added to Google Preferred. Weinstein noted that YouTube TV ads bought through Google Preferred will be dynamically inserted, letting advertisers target ads based on demographic profiles rather than just showing everyone the same ad as with the majority of traditional TV buys.

This January, YouTube said all videos in Google Preferred will be reviewed by human moderators before they’re eligible for monetization. That came after a series of “brand safety” blowups in the past year, when advertisers discovered spots unexpectedly running against hate speech and other content they didn’t want to be associated with.

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Video Accounts For 50% of Twitter’s Ad Revenue

Twitter has been pushing hard into video and its paying off. The company announced today that it has beat forecasts for Q1 2018, helped by a 53% jump in international revenue, which was led by strength in the Asia-Pacific region. Twitter attributes revenue growth in the region being primarily driven by growth in video in Japan and performance ad products in its China export market.

The company says that video, which was its fastest-growing ad format in Q1 (again), accounted for more than half of its $575 million in ad revenue for the quarter.

Total ad engagements for the company increased 69% year-over-year, resulting from increased aggregate demand, continuing mix shift toward video ad impressions, and improved CTR, which grew on a year-over-year basis across the majority of ad types as ad relevance continues to improve. CTR also benefited from the ongoing growth of more engaging video product features in Q1 — such as the Video Website Card and Video App Card — says the company.

Going forward, the company plans to remain focused on online video to drive revenue, it also says it will introduce new ways to buy ads on the platform. Other revenue priorities for Twitter include improving its core ad offerings through better performance and measurement, including ad platform improvements, self-serve measurement studies, and third-party accreditation; and continuing to grow DES revenue through its product and channel segmented go-to-market approach.

Other key numbers from the earnings report:

– Increase of 6 million monthly active users from the previous quarter
– 336 million monthly active users Total
– $665 million in quarterly revenue (down 67 million from the prior quarter)
– $575 million in advertising revenue
– 69 million monthly active users in the United States
– Profit was $61 million
– Cost per engagement (CPE) was down 28 percent from the year prior

Types of Videos Facebook Won’t Monetize

Facebook is expanding pre-roll video ads to more areas on the platform. The company is also clarifying its monetization policies giving additional detail on the kinds of videos that aren’t eligible for ads.

The company has announced that after testing pre-roll ads for shows in its video section, Facebook Watch, it will be expanding the test to other places where videos can be found, like in search results or on a Facebook Page timeline.

In addition to previous ad-eligibility guidelines released last fall that restricts ads from running on certain kinds of content — including videos that have sexual themes, depict violent or illegal activity, contain inappropriate language, or misappropriate children’s characters — Facebook will not monetize certain low-quality videos or publishers who engage in sharing and distribution schemes.

“We are focused on growing payouts for creators and publishers who develop engaged and loyal audiences and are working on growing payouts for partners who develop loyal, engaged viewing,” the company wrote in a blog post.

Other types of video content ineligible for monetization include:

Manufactured sharing and distribution schemes:

Content partners with paid arrangements for Pages to methodically and inorganically share videos can no longer monetize views originating on the third party Pages. According to Facebook, this behavior optimizes for distribution rather than quality and does not build deep relationships between people and content.

Formats unsuitable for an ad:

When content partners use video formats that aren’t actually video – like static or minimal movement videos or content that just loops – they are creating experiences not intended for ad break monetization, says Facebook. People do not expect to see ads in this type of content, and this is not the type of content advertisers want to run ads in.

Limited editorialization of content:

Facebook says that pages primarily distributing videos of repurposed clips from other sources with limited editorialization do not foster engaged, loyal communities in the way that Pages that produce and publish original, thematic or episodic videos do. “While we will not be taking immediate enforcement action on this issue, we want to signal to content producers that this is a programming style we will more deeply evaluate over the coming weeks and months to assess what level of distribution and monetization matches the value created for people,” the company wrote in the blog post.

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Is Youtube Red Failing?

Alphabet just had its 2018 Q1 earnings call, but YouTube Red was barely mentioned. Could this be a sign that the company is distancing itself from the product?

Despite YouTube Red having been a high area of focus for the company in the past, the service barely received a mention on Alphabet’s Q1 2018 earnings call today. Aside from Google CEO Sindar Pichai saying the company will continue “invest further” in the service, nothing else was mentioned. While the snub doesn’t completely rule out the future of the SVOD service, it’s not a good sign when a company completely neglects mentioning a service that it has poured time and effort in. And this lack of mention is not new. In Alphabet’s Q4 2017 earnings call, the service wasn’t part of the scheduled conversation either.

This lack of mention could be a sign of things to come for the service, which has yet to really “take off” since launching in 2015. While the company has invested in developing a range of content from a Jake Paul Talk Show to a “Karate Kid” reboot, it has kept its spending on content at a minimum. Recently it was reported by Bloomberg that YouTube was hitting the pause button on its Hollywood expansion. According to the publication, Google has decided to hold spending at current levels for the streaming service over the next two years, people with knowledge of the matter said. YouTube only plans to spend a few hundred million dollars on TV shows and movies this year, according to the sources. While that sounds like a lot, as Bloomberg noted, a flat budget means the company risks falling further behind Netflix, Amazon and Facebook.

To make the case of YouTube Red more confusing, YouTube CEO Susan Wojcicki recently referred to it as a music service, leaving many to ask the question: What’s going on with YouTube Red?

While the current state of Youtube Red is a bit hazy, regular old YouTube continues to be a key revenue driver for the company, according to Pichai, who also said that over the last year, channels earning six figures on the platform grew by 40%.

Going forward Pichai says the company will continue to invest in live content, which has worked well for the service. The CEO noted that Beyonce’s performance at Coachella was one of the most viewed live performances on the service.

Despite the company once again being in the spotlight this week for placing ads against inappropriate content, the issues weren’t directly mentioned in today’s earning call. But the Google CEO boasted that in Q4 of last year, over 6 million videos deemed inappropriate were removed from YouTube– 75% of which were taken down before getting a single view.

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Top 10 pay-TV operators to lose $20bn

Despite adding 84 million subscribers between 2017 and 2023, subscription and PPV revenues for the world’s top 517 pay-TV operators will fall by $18 billion (€14.67bn) to $183 billion, according to analyst firm Digital TV Research. From the total, 29 pay-TV operators earned more than $1 billion in revenues in 2017, but this total will drop to 25 by 2023.

About $20 billion of the revenue losses will fall to the top 10 players; bringing their total down to $87 billion. The pay-TV revenue share for the top 10 operators will fall from 53 per cent in 2017 to 48 per cent in 2023.

All of the top 10 operators in 2017 will lose revenues over the next five years. In fact, 168 of the 517 operators (32 per cent) covered in the Global Pay-TV Operator Forecasts report will lose subscription and PPV revenues between 2017 and 2023.

Pay-TV subscriptions for 517 operators with 747 platforms [132 digital cable, 126 analogue cable, 286 satellite, 137 IPTV and 66 DTT] across 135 countries covered in the report will increase from a collective 880 million in 2017 to 967 million by 2023. These operators took 87% of the 1,006 million global subscribers by end-2017, with this level expected to inch up to 88% of the 1,100 million total by 2023.

“The good news is that 15 operators will add more than $100 million between 2017 and 2023, with China Telecom up by $1.4 billion,” advised Simon Murray, Principal Analyst at Digital TV Research. “However, five operators, including four from the US, will lose more than $1 billion in revenues. Seven of the top 10 losers will be in the US.”

Top 10 operators by revenues ($ million)

Operator Country 2017 Operator Country 2023
1 AT&T (total) USA 30,740 1 AT&T (total) USA 23,577
2 Comcast (total) USA 20,017 2 Comcast (total) USA 15,433
3 Charter merged (total cable) USA 15,589 3 Charter merged (total cable) USA 11,942
4 DISH Network (satellite) USA 12,310 4 DISH Network (satellite) USA 10,381
5 China Radio & TV (total) China 8,562 5 China Radio & TV (total) China 7,405
6 Sky (satellite) UK 5,258 6 Sky (satellite) UK 4,613
7 Verizon Fios (IPTV) USA 3,857 7 China Telecom (IPTV) China 3,753
8 Cox (total) USA 3,691 8 Sky (satellite) Brazil 3,662
9 Sky (satellite) Brazil 3,586 9 Verizon Fios (IPTV) USA 3,268
10 Altice USA (total cable) USA 3,190 10 Cox (total) USA 2,829

Source: Digital TV Research

Snapchat Ad Length: In Average about 8 Seconds Long

Advertising intelligence company MediaRadar has analyzed Snapchat brand activity and issued a report showing that the average Snapchat ad length is eight seconds.

No other social platform makes it as easy to bypass video ads, so marketers need to grab the viewers’ attention by the first frame. Simply tapping on a Snapchat ad lets viewers bypass it and get on to something they’d rather watch. Some Snapchat advertisers are running ads that are less than 5 seconds long, says MediaRadar. The majority of ads on the platform-60 percent-are between 8 and 10 seconds long.

MediaRadar also looked at where advertisers put their ads on Snapchat. Some of the platform’s Discover channels are far more popular than others. For example, the iHeartRadio channel was the most popular, getting placements from 61 advertisers. The CNN channel was the least popular. It’s no surprise, then, that CNN ended its Snapchat Discover channel in late December.

The data MediaRadar looked at was for ad placements carried out through its platform from November 2017 through January 2018. In that timeframe, 397 brands placed video ads on 52 Discover channels. The average buy was for 4 or 5 channels, and the largest was for 29 channels.

“We found almost no examples of a brand buying across all of a single publisher’s Snapchat channels. For example, no advertiser buys both Wired and Vogue (Condé Nast), or Cosmo and Esquire (Hearst). This reinforces the idea that buys are gender targeted,” MediaRadar’s report says.

Brand categories advertising on Snapchat most often are media and entertainment (48 percent), technology (13 percent), and retail (12 percent).

For data on much more than just the average Snapchat ad length, download “MediaRadar’s Snapchat Snapshot” for free.

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Three reasons every major TV Station will launch a DTC service

CBS has done it, Disney is doing it, and Discovery is thinking about it. Launching direct-to-consumer services is the new wave of television. Here are three reasons why every major TV programmer will take the DTC plunge.

Discovery CEO David Zaslav is a man on a mission to maximize the value of the massive library of content his company controls. He has pay TV distribution and TV Everywhere delivery covered. Now he is turning his attention to online delivery with direct-to-consumer (DTC) services. He is testing the waters through Amazon Channels in Europe with the Eurosport and Discovery brands. He is also expanding the Motor Trend brand to worldwide online delivery.

Mr. Zaslav is not the only TV executive looking at DTC delivery. Here are three reasons every TV programmer will likely launch a direct-to-consumer service in the coming months and years.

Reason #1: Audience segmentation

All viewers are not created equal, yet that is how traditional television treats them. Some viewers are passionately devoted to a channel brand or show delivered by that channel. Others have only a casual relationship with a channel. Linear television delivery and pay TV treats these two types of viewers the same.

Direct-to-customer apps allow a content provider to segment viewers and, most importantly, identify the most committed customers. Les Moonves, CBS chairman, understands the principal and is beginning to monetize the opportunity. Two million of CBS’s most committed fans are paying $5.99 a month to subscribe to CBS All Access. Many are paying $8 a month because $2 of their pay TV subscription goes to CBS for almost the same set of content. CBS is also allowing these most valuable viewers an opportunity to spend more. For example, All Access subscribers can pay $4 extra to watch on-demand shows without ads.

Simply put, a DTC service allows a programmer to identify their best customers and upsell them to additional content and services.

Reason #2: Flexibility

Mr. Zaslav has two of the three main distribution outlets covered. Discovery and Scripps content is a mainstay of traditional pay TV service. vMVPDs like Sling TV and DirecTV Now already offer Scripps content, but Discovery channels are only available in the newest entrant, Philo. Mr. Zaslav is working to correct that.

Discovery also has a robust suite of TV Everywhere Go apps available. Pay TV customers can watch the live channels and a library of on-demand content but must sign in with their pay TV credentials to watch. These channels are delivering a sizable millennial audience according to Mr. Zaslav:

“They deliver a meaningful millennial audience that we get to sell to you, and the length of view is often two or three times that of traditional TV.”

Unfortunately, younger viewers are leading the cord-cutting trend. The 9% of the U.S. population that has never had pay TV (cord-nevers) has an average age of 34, according to GfK. Since many young people rely entirely on internet resources for video, the cord-nevers group is liable to grow quickly. In other words, TV programmers risk completely missing their future audience. Launching a DTC service gives Discovery a tool to reach those younger viewers as they continue to lead a pay TV-free existence.

Reason #3: Provide the experience viewers expect

To be sure, compelling content is critical to holding a viewer’s attention. According to Paywizard, however, the experience is equally important. In a recent survey, the company found that 79% of U.S. survey participants thought that experience factors were as important as content. Issues such as flexibility, attention to customer preferences, billing, sign-up, and cancellation are examples of these factors.

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How Vevo Stays At The Top Of The Charts On YouTube

As a joint venture between Sony Music Entertainment, Universal Music Group and Warner Music Group, Vevo creates and distributes more than 330,000 music videos across YouTube and its owned-and-operated channels. Vevo gets access to YouTube’s massive audience, and YouTube gets a cut of the revenue.

With 30 million viewers per day and 116 million per month in the US, according to comScore, Vevo has a valuable audience to sell.

“We package up the top stars in the world and sell that to advertisers,” said Kevin McGurn, chief sales officer at Vevo. “The mass majority of what we do is on audience and the media around it.”

Vevo’s valuable audience and artist relationships have allowed it to thrive through YouTube’s brand-safety debacle. It sustained reach and traffic on the platform, even when YouTube consolidated Vevo subscribers under artists’ accounts in January.

Vevo has maintained 20-30% growth for the past few years, and its inventory recently became available to a broader base of buyers through Googled Preferred.

“We’re a growth story in what is otherwise a massive amount of shrinkage in TV,” McGurn said.

But YouTube isn’t the be-all and end-all for Vevo. While the network has allowed music labels to capture many of the eyeballs that left networks like MTV and VH1 during the rise of the internet, Vevo is still vying to bring them back to the living room.

“YouTube is the largest video search engine in the world, but DirecTV Now, Sony PlayStation Vue and others have the potential to allow users to curate their own music video experiences,” McGurn said. “We watch them closely and think about how we can maximize that.”

How do you differentiate your sales strategy on YouTube?

KEVIN MCGURN: We sell sponsorships against the catalog we represent from Universal Music and Sony – the audience Vevo represents – as a standalone. In most cases, brands buy us first and then go to Google Preferred to get that broader reach.

Most buyers see us as well-differentiated as a legacy, and we enhance that with new products. For brand safety, we offer advertisers the ability to buy on TV content ratings.

We also offer guaranteed reach. Marketers have asked for a long time to limit the frequency of their campaigns. We’re able to fulfill that and transact on it. That helps us differentiate from the traditional go-to-market for Google Preferred.

Did your reach take a hit when YouTube moved all of Vevo’s subscribers from your channel to individual artist accounts?

We haven’t seen tremendous fluctuation in traffic. We track with the growth rate of YouTube because we’re such large percentage of their viewership. It fluctuates with channels and creators, but we have so many channels and so much content on a weekly basis [that] our growth continues to be strong.

How did YouTube’s brand-safety issues affect you?

We’re probably beneficiaries of the changes. YouTube is making maneuvers that will point to a video that’s brand-safe and monetizable. We would be that video in many cases.

We’ve always been brand-safe. We have the world’s largest celebrities. We have a network of folks looking at every video before it goes live and algorithmic curation.

How do you balance the traffic you drive to YouTube versus your own site?

I look at YouTube as an MVPD much like Comcast or DirecTV. At the core, it’s just SEO – trying to figure out ways for the recommendation and search engines to point to your videos more than others. That’s standard practice on YouTube. The platform is fairly agnostic to the buyer. We try to grow all of the channels that we think are relevant to the end user.

What could cause your YouTube traffic to decline?

A change in the algorithm. YouTube is trying to optimize for the most time spent and the highest traffic. They have a lot of controls to point people in the direction of content they feel might get a higher level of engagement.

The influx of content can change how much you’re getting shown. The recency and frequency of video uploads is a good indicator of viewership. We have a pretty eternal spring of content based on our partnership with music labels, so we ride above that ebb and flow that other markets might suffer from.

Brands hate that you can’t measure advertising on YouTube. What metrics are available to you?

We generally just sell audiences measured by Nielsen. I know about the other struggles with who gets to measure what inside the walled garden. There’s definitely more work to do. By no means is measurement where we want it to be.

What can YouTube do better as a media platform?

User-generated and premium content should be treated differently. The production quality, expenditure and talent that professional content represents should be separated.

I’m not a proponent of training viewers to skip advertising. I don’t think it represents the appropriate tax a user should pay to access professional content. YouTube doesn’t offer the ability to change the amount of skippable or TrueView ads called to professional content. That should be a control of the content provider, not the platform, regardless of the user experience.

The economics of MVPDs are a nod toward the production quality and spend it takes to generate these videos. It’s why you don’t see full-length TV shows on YouTube or Facebook. They don’t have an economic equation that warrants a multimillion-dollar episode production.

Why work with them if they don’t treat your content fairly?

It represents the largest distribution opportunity in the world. A music video is ripe for piracy if you don’t allow it to exist on the biggest-reaching platform. You want people to access it in a brightly lit environment.

But that environment has to treat it differently than user-generated content. I would never say YouTube isn’t the right place for music videos. It just so happens that YouTube has been the only game in town for the past 12 to 13 years, but that could change.

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Netflix Q1 exceeds expectations

Netflix’s Q1 numbers show that the OTT operator is growing as fast as ever. It added a net 7.4 million global subs during the quarter, only slightly down on the previous quarter’s record-breaking 8.33 million.

US new additions were also healthy at 1.96 million. Overall, this latest quarter year were the second-biggest ever, and the quarter-year exceeded all consensus expectations, and to a total of 125 million subs. International operations now generate 50 per cent of revenues, and 55 per cent of its subscribers.

Netflix generated $290 million (€234m) net income on revenue of more than $3.7 billion. That compared to net income of $178 million and revenue of $2.63 billion during the previous-year Q1 period.

Netflix’s CEO Reed Hastings and Chief Content Officer Ted Sarandos took the analyst call with Benjamin Swinburne of investment bank Morgan Stanley, and confirmed that they would be spending “upwards” of $8 billion this year on content.

As to the recent bundling of Netflix into the pay-TV operations of Comcast and Sky, Gregory Peters, Chief Product Officer, said: “We love the fact that we can work with these partners to access whole new groups of consumers, make it easy for them to find out about Netflix, to sign up and have a great way to access the service and watch more and more. So you’ll see us leverage that sort of evolving strategy not only in the markets that we’ve been in for many years, but also in these new markets.”

Netflix confirmed that it will be launching a dedicated service to mobile phones. Peters said: “We definitely want to have a mobile experience which allows us to access more of that market and access a group of consumers who basically only want to have their relationship with Netflix on a mobile device. And so whether that is making sure that our apps are lightweight enough so they load really quickly and have a great experience there, to making sure that our encoding is very, very efficient, so that even if you have a less-than-great network connection, you can still get a really incredible video experience on that mobile phone.”

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