$142.5B 2015 U.S. ad spending for 200 LNA
Not content with only going after TV advertisers' budgets, YouTube is also chasing down dollars from smaller advertisers who might already be spending money in digital but not yet on video.
The Google-owned video service has acquired mobile video startup Directr, the companies said on Wednesday, part of an effort to make it easier and cheaper for small businesses to create video ads. The two-year old Directr currently offers tools for small- and medium-sized businesses to create low-cost videos for a monthly fee. YouTube plans to continue to offer those tools but now at no cost.
A YouTube spokesman declined to comment on the deal's price and referred a request for comment to the company's announcement.
"Directr is joining the YouTube ads team, where they'll help us make it easier for advertisers to create and upload awesome videos," YouTube posted to its Google+ page on Wednesday. "Besides making the existing Directr app free on iOS, we aren't making any immediate changes. Stay tuned for more info."
Buying a company whose customer base is mom-and-pop marketers may seem odd in light of YouTube's prominent courtship of big brand advertisers. Earlier this year YouTube began selling ad packages that more closely resembled TV deals as a way of getting more money from those high-profile, deep-pocketed marketers.
But YouTube's NewFronts deal-making only covers the top end of the advertising spectrum. Directr is a way to go after advertising's long tail.
Small- and medium-sized businesses are at a disadvantage when it comes to video advertising. In addition to the price of running an ad, they also have to pay the cost of creating an ad, which is a lot more expensive and time-consuming than typing up some ad copy and uploading a photo. By taking creation costs out of the equation -- or at least lowering those costs -- YouTube is making it easier for tight-walleted advertisers to dedicate more of their budgets to paying to run those ads on the video service.
Getting more small- and medium-sized advertisers to buy ads will also help YouTube fill more of its endless inventory, especially the kind that bigger brands don't want. Bigger brand advertisers typically avoid YouTube's user-generated videos for fear of their ads showing up next to something unfavorable. But smaller advertisers may not be so picky if those videos can be had for lower prices.