Inside YouTube's struggle to win TV ad dollars

Google is having trouble convincing large advertisers that YouTube is a proper substitute for TV, as large brands and ad agencies say that the platform lacks the sophistication of rivals in connected TV like Roku and The Trade Desk. For years, YouTube has been making the case that it is a viable TV alternative, with 120 million viewers watching on big screens in the living room. But advertisers say that YouTube is still a mostly digital play—good for online video budgets but not strong enough to command a greater share of TV advertising. There’s a heated race among connected TV players to take advantage of the ad dollars that are following consumers as they shift their viewing habits from traditional TV to streaming video. But YouTube is struggling to lead the marketplace the way it does in digital. At the heart of the issue, according to a number of brands and media buyers interviewed on a condition of anonymity, is that YouTube’s ecosystem is missing core components that TV buyers need. YouTube and Google’s CTV ecosystem, which includes YouTube TV, a live TV subscription offering, does not have adequate tools to manage frequency, which brands use to control how often they show ads to the same person. Advertisers also say they can’t use traditional ways of measuring TV inside of YouTube, making it incompatible with the rest of their ad campaigns. A Google spokesperson tells Ad Age that YouTube is working on its measurement program and pointed to a deal struck last year to adopt Nielsen ratings and measurement. Nielsen currently measures YouTube TV, and it will come to YouTube’s CTV app later this year. Google is also expected to announce more measurement partners in the coming weeks, the spokesperson says. “As YouTube’s CTV viewership continues to grow, we know it’s essential for advertisers to be able to measure their campaign’s reach via third-party providers,” Debbie Weinstein, VP of global solutions, Youtube, said in an email. “We’re actively working with those partners to enable measurement of YouTube’s CTV reach, on a standalone, cross-device and incremental basis. We’re pleased that for the first time, later this year, advertisers in the U.S. will be able to measure the scale of their YouTube CTV campaigns with Nielsen.” For some brands, though, YouTube’s leap in measurement has not come quickly enough to factor into their immediate upfront advertising plans. Mondeléz, for instance, committed more this year to The Trade Desk, the digital advertising platform, to place its growing CTV ad spend, says Jonathan Halvorson, VP of consumer experience at Mondeléz. Halvorson would not disclose how much the company spends yearly on CTV advertising, but did say The Trade Desk would grab a greater share of the CTV budget than YouTube. “Our partners at Publicis Media organized a lot of executive top-to-top sessions with leaders in the CTV space to help educate our teams,” Halvorson said in an email. “I’ve been positively surprised by the advancements that The Trade Desk, Roku and other partners in CTV have made versus digital platforms. Their focus on advertisers’ needs for advanced targeting, inventory management, and guarantees are setting them apart from YouTube and the rest of the marketplace.” Mondélez is still very much a Google and YouTube advertiser, it’s just that the CTV portion of its spending is flowing elsewhere. Top brands and agencies often do highly structured ad partnerships with Google that include search, internet display ad campaigns and video, all rolled into one. There is no question that Google, and by extension YouTube, are still among the biggest digital advertising players. Just last week, Google earnings showed that it generated $50 billion in ad revenue in the second quarter, a year-over-year increase of 69%. YouTube brought in $7 billion, up 84% from the same period last year. But there is intense competition for dollars that are fleeing TV. CTV ad spending in the upfronts is expected to increase 50% this year to $4.5 billion, according to eMarketer. CTV is increasingly important for the traditional TV upfront market, too, which equals $20 billion, according to eMarketer. Disney, NBCUniversal, ViacomCBS and others are bundling CTV apps and primetime broadcast TV into their ad packages. YouTube, however, is finding itself in a murky middle ground, as it is not quite as attractive as a CTV player as it is an online video platform, according to a number of advertisers. YouTube has tried to shed that image with its live YouTube TV, which has more than 3 million subscribers. The YouTube app, with 2 billion users, also reaches a growing audience on TV sets. One media buyer says that Google tried to sell agencies and brands YouTube TV during negotiations this year. YouTube started to package YouTube TV ad inventory with YouTube Select, which is the upper-echelon of user-generated content on the main video site. Some of the advertisers were not biting on YouTube TV, though, because they already buy linear TV, which has much of the same programming, and they didn’t want to duplicate the audiences they are reaching. “They’ve tried to put YouTube TV into our YouTube Select deals,” says one media buyer at a major agency, speaking on condition of anonymity. “But then you’re just adding frequency.” Advertisers say they are asking Google to offer the option to decouple YouTube TV from YouTube Select. The real downside to YouTube is under the hood of Google’s technology, though. There are still too many gaps, advertisers say, that prevent them from executing ad buys in the same way they are accustomed to doing so on TV. “We know that the marketplace for TV is challenging, at best,” says another media buying executive at an ad agency. “And in order to really transfer dollars over from linear cable to something like YouTube, you need to understand, ‘Am I getting the same efficiency? Am I getting the same value? Am I getting the same audience?’” YouTube also can be a difficult platform to grasp with channels run by popular online celebrities, niche media companies, major publishers and more. It does not, in most cases, have prestige programming like Netflix, Amazon or Hulu. “We have a lot of clients that are deciding, for whatever reason, that they don’t necessarily want to buy YouTube in the same way that they have done before,” says a third media buyer, “where they’re doing these big agreements like an upfront, because they’re unsure of what it delivers.” Contributing: Jeanine Poggi

Inside YouTube's struggle to win TV ad dollars

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