Youtube for Brands - Case Analysis PDF

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MKT5600: YouTube for Brands 1) Please provide a brief overview of the case. “YouTube for brands” case analyzes the changes applied by YouTube to make the massively popular website more attractive to brands. Building from its foundation of amateur, usergenerated content (UGC), YouTube had turned to experimenting with professionally and organizing its videos into channels. When question arises as to capturing marketing dollars to its online video platform, it struggled. The societal video web site aspires to be a 'brand safe' platform which important marketers use to market their video ads. TV advertising market in 2013 was expected to reach $66 billion whereas online video advertising was expected to reach $4 billion. Out of this, YouTube owned one third of the market at $1.3 billion. YouTube’s main aim in 2013-2014 was to come up different pricing strategies that will aid it to gain some of the TV advertising market by placing themselves as alternative advertising platform. In 2014, 98% of US households owned a television, broadcast TV advertising allowed for a diversity of advertising messages with access to a wide audience. Paid cable further provided opportunity to target specific niche audiences. Study showed that average American watch around five hours of TV per day. This amounted to approximately 160 ads per day or 58,400 per person per year. Primary national television networks – CBS, NBC, FOX, ABC and CW generated revenues by selling airtime typically in lengths of 15, 30 or 60 seconds. An average 30seconds spot ranged from $9 during daytime to $34 during prime time (8pm to 11pm). Cost measurement was cost per mille (CPM) or cost per thousand impressions. YouTube came up with a different strategy for advertising. Advertising was available in both video and non-video formats. Non-video advertising format consisted of display ads, also known as banner ads, which appeared to the right of the selected video or directly above it. These ads were bought using Google AdWords, a keyword based auction platform. There were two types of video ad formats – non-skippable and skippable. Non-skippable ads were available before, during or after the video content and purchased based on CPM basis. This basically mimicked television advertising style with the exception that they were interactive. User can click on the ad which will take it to a different video or to a webpage of the product/service. Skippable ads, also known as “True View”, could be skipped after duration of five seconds. This ad also played at the beginning of the video content. With this type of ad, advertisers were only charged by youtube for ads that run 30 seconds or the duration of the ad, whichever was short. Google claimed that about 15%-45% users let the entire ad play. There were many different brands that advertised on youtube through their own channel. Eventually it was discovered that user generated content (UGC) had more popularity their own channel. To make the most of this situation, many brands started endorsing content creators to

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MKT5600: YouTube for Brands create content for their product. With this case shows examples of different brands such as Red Bull, CoverGirl, L’Oreal and Lego’s strategy of using YouTube.

2) What options are available for brand advertisers to use YouTube to engage with consumers? What are the pros and cons of each option? YouTube originally began by organizing their content in channels or streams of programming that were bundled according to personal preferences, genre or brands. In 2014, there were three types of channels available for brands such as standard user channels, brand channels and custom brand channels. Standard User Channels: By registering on the website everyone (individual or company) was given a standard YouTube user channel. This type of channel was free of charge. In this type of account, users were able to upload videos, make playlists of favorite videos, mark them in a watch later list, share them on social media sites and subscribe to YouTube channels. Pros: -

Free channel No strings attached Store any type of video content (as far as it was within guidelines)

Cons: -

Not many features Everyone can get this one.

Brand Channel: This type of channel was free and similar to standard user channels but offered only to brands for the purpose of corporate branding. These could be used by brands to house media such as how-to videos, tutorials, commercials, behind-the-scenes videos and other relevant content for their customers. Statistics showed that only 7.5% of YouTube videos hosted by world’s top-500 brands were repurposed TV commercials. Pros: -

Exclusive for corporate branding Free account Unique to store brand content

Cons: -

Similar to standard user account. No unique features compared to standard account Minimal to no customization

Custom Brand Channels: Custom brand channels compared to previous two types is not a free channel. Based on different websites, it was reported that it cost a minimum of $200,000 per year to maintain this channel. With a purchase of this type of channel, companies gained access to Mangesh Chaudhari

MKT5600: YouTube for Brands customized features such as unique channel layout and add-on features such as gadgetsinteractive web apps that created a distinctive experience for their subscribers. Uploading live streaming of video content or extensive user generated content was required to have a custom channel. Due to high price point, most brands opted not to choose this option. Pros: -

Exclusive feel Opportunities to add/remove add-ons as required. Opportunities to customize. Allowed to created unique experience to subscribers compared to standard and brand channel Allowed live stream activities

Cons: -

Very high price point

Exhibit 1 below also shows comparison between the three account types available.

There was a fourth type of channel introduced as the “original channels”. Through this approximately $150 million in funding was advanced to well-known celebrities ranging from rapper Jay-Z and comedian Any Poehler. By 2013, YouTube still had original-content channels but stopped financially supporting and referring to them in that manner.

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MKT5600: YouTube for Brands 3) As a brand marketer, what recent YouTube initiatives are you excited about? Are there any you do not like? Make sure to elaborate on why. There are primarily three types of advertising formats on YouTube. i.

Non-video formats:

Non-video advertising format consisted of display ads, also known as banner ads, which appeared to the right of the selected video or directly above it. These ads were bought using Google AdWords, a keyword based auction platform. This works similar to Google's paid search results. These are also transparent overlay ads, which were text ads that appeared at the bottom of the video. There is high traffic of people accessing YouTube. As per case, about 20% of all internet traffic in North America, Europe and Latin America is observed. There is not much pricing information provided in the case study. Assuming these are the cheapest form of advertisement google offers, it is a very good platform for smaller firms or startups to advertise or it could be for companies who do not wish to invest big dollars in advertising their product. With the amount of traffic seen and keywords unique to their product will provide easy advertisement along with the video content being viewed by the user. ii.

Video Format – Non-skippable Ads:

As mentioned earlier this is similar to TV commercial format. These ads were available before, during and/or after the video content was played. Purchasing this type of ad was also similar to TV commercial format i.e. CPM basis. When comparing this format to TV commercial, there was one major advantage. These commercials were interactive. At any point in the commercial, if the user clicks on it, it will go to the product or service video or to its webpage. Conversion rate for inquiry for this was very high. During a TV commercial a user would see it and think that he or she will reach out after a certain activity. After this said activity, there is also a possibility that the user will not follow through or just move to a different product/service based on their other interactions. With a clickable ad, depending on the user’s interest, he or she may follow through and either research more information or even purchase the product or service being advertised. iii.

Video Format – Skippable Ads: Skippable ads were also known as TrueView ads. This type of advertisement always played at the beginning of the video. After five seconds of play time, a button would appear that allowed the user to skip the ad and proceed towards the content he or she intended to watch. TrueView ads could be placed in-search, appearing as a result of YouTube search, in display, appearing a suggested video next to a selected video or in-stream, appearing before, during or after a video was watch. This will be a cheaper form of the video ad as it will not charge the advertiser until at least 30 seconds or entire ad whichever is shorter is played by the user. Also there was no maximum

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MKT5600: YouTube for Brands length for this type of video. As per Google's statistics, somewhere between 15% and 45% YouTube viewers let the entire ad play. Based on the pricing strategy, this is could be a go-to advertising format that most of the brands may experiment with.

4) What is your assessment of the TrueView initiative? Skippable ads were also known as TrueView ads. This type of advertisement always played at the beginning of the video. After five seconds of play time, a button would appear that allowed the user to skip the ad and proceed towards the content intended to watch. TrueView ads could be placed in-search, appearing as a result of YouTube search, in display, appearing a suggested video next to a selected video or in-stream, appearing before, during or after a video was watch. Based on the model of TrueView, it seemed like it has more exposure compared to a traditional style commercial. Even if the user is not forced to see the complete commercial, an idea of the product or service is planted in their minds. Since it will appear multiple times like in the search results or suggested videos on the side bar or even during the content stream, user is reminded about the product or service multiple times. As per statistics, visual memory is stronger compared to hearing, so seeing the product multiple times will be planted in memory. During the necessity of this product or service user may remember seeing about this and may contribute towards the conversion rate. From an advertiser’s stand-point, it appears to be at a cheaper price point compared to the non-skippable version or the traditional TV commercial. This is so because an advertiser will not pay for run time until it is played for its entire duration or at least 30 seconds, whichever is shorter. As mentioned earlier, statistics show that somewhere between 15% and 45% YouTube viewers let the entire ad play.

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