YouTube Is Recycling Last Year's NewFronts Pitch -- Because It Worked

100 Parent Brands Bought Google Preferred Last Year, Including 30 That Were New to YouTube

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Credit: Andrew Harrer/Bloomberg
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Google's YouTube is trying something new with its NewFronts pitch this year. Unlike each of the previous years, YouTube is not eschewing last year's sales strategy and trotting out a new one to woo advertisers into signing upfront commitments to advertise on the online video service.

This week YouTube began briefing agencies on its NewFront pitch. As was the case last year, advertisers will be able to buy guaranteed placements on the top 5% of YouTube channels (based on popularity and engagement) in exchange for an upfront spend commitment. Also like last year, YouTube will continue its marketing campaign to promote creators within that Google Preferred cohort; its next phase touting three undisclosed creators is set to roll out in April.

There are some tweaks. Last year, Google Preferred packaged those YouTube channels into 14 content categories that advertisers could buy. This year, there are 12 categories after YouTube decided to consolidate a few music-related categories into a single music category. Those 12 categories are still made up of the top 5% of YouTube's channels, so it's not like YouTube is cutting the amount of Google Preferred inventory. In fact one media buyer said the number of Google Preferred impressions has increased by 5% to 7% recently. And by the end of this year, YouTube will be extending Google Preferred to at least 10 new markets, up from five markets when it was introduced last year.

YouTube declined to say how much money it is requiring advertisers to spend in order to buy Google Preferred this year. One agency exec said this year's annual minimum spend requirement to access Google Preferred inventory is $2 million.

YouTube is reviving the Google Preferred program because it seems to have worked. Roughly 100 parent-level brands in the U.S. -- companies like L'Oreal and Nestle that own multiple individual brands count as one brand -- bought enough of the 14 available categories that Google Preferred inventory was all-but-sold-out by October, according to YouTube. And of those 100 parent-level brands that signed Google Preferred deals in the U.S., 30 were parent-level brands that had never advertised on YouTube before buying Google Preferred.

Most of the advertisers that signed Google Preferred deals last year bought a mix of categories as well as a blanket buy across the top 5% of YouTube channels, regardless of category, a YouTube spokeswoman said.

Google Preferred "gives L'Oreal USA the beauty category exclusive on a platform that reaches millions of our existing and potential customers every day," L'Oreal USA CMO Marie Gulin-Merle said in an emailed statement. She added that the company used its Google Preferred deal to run pre-roll ads "across our portfolio of brands for product launches and awareness campaigns."

That brand buy-in benefitted YouTube's other customer base, the people who make videos for marketers to advertise against. Revenue for the top 100 creators within Google Preferred rose by 70% year-over-year while revenue for the average YouTube creator rose by 50% over the same span, according to YouTube. And channels within Google Preferred also added 45% more subscribers and 76% more views in the fourth quarter of 2014 compared to what they numbered the prior year.

It also helps that advertisers were able to see some positive results from their Google Preferred campaigns. On average, brands saw an 80% increase in ad recall and a 17% lift in brand awareness for those campaigns.

Having shown that Google Preferred was able to bring first-time YouTube advertisers into the fold, the aim for YouTube this year is to build on last year by turning these Google Preferred advertisers into everyday YouTube advertisers as well. "We're not thinking only about Google Preferred, but helping folks understand the value of YouTube," said Tara Walpert Levy, Google's head of Americas Agency Solutions.

"The TV analogy would be: If Google Preferred is primetime, we're also trying to help them navigate the other day-parts we offer, which is the rest of YouTube," she added.

For example, YouTube's TrueView ads may be the service's most high-profile ad format, but that doesn't mean TV advertisers who kept their money off YouTube know about the product that lets people skip an ad after it has played for five seconds and only charges advertisers if people watch the full ad. They might not also know that Google recently signed a deal with the NFL to get clips of the country's most valuable content on YouTube, or that it's added a way for brands to get in front of people when they're watching Spanish-language channels or individual videos.

That's why this year YouTube is playing up TrueView, its NFL deal and the new U.S. Espanol targeting program in its NewFronts dealings.

Ms. Walpert Levy said these programs "supplement" the Google Preferred deals. YouTube is still working out how it will package that deal to advertisers, but she said it will likely be bundled with the rest of YouTube's sports-related channels. And while the U.S. Espanol program was announced earlier this month and one campaign tied to the NFL deal ran around the time of the Super Bowl, she said the NewFronts talks are the first time it has been formally presented to advertisers.