YouTube's latest ad twist: Brands pay even if a viewer skips

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YouTube announced a new way of buying video ads based on impressions.
YouTube announced a new way of buying video ads based on impressions. Credit: hocus-focus/iStock

YouTube's new ad product will still cost advertisers, even if the viewer presses skip. Kind of like TV.

The video service, owned by Google, has a new skippable ad offering that prioritizes reaching large audiences over completed views of commercials. The new ad product, a variation of YouTube's five-second skippable ads, is designed for brands that are comfortable with the TV-way of buying.

Here's how it works: The advertiser runs its video ad, typically 10- or 15-seconds long if made for mobile. The advertiser pays for each impression on a cost per 1,000 impression basis—and impressions count after two seconds, the industry standard, even if the user winds up skipping at the five-second mark, an option YouTube offers.

The traditional skippable ad is still available, too, where the advertiser only pays when ads are completed.

The ad product is an offspring of YouTube's standard TrueView ad, skippable after five seconds, so named because advertisers were only paying for what were seen as "true full views." The new variant is called TrueView for Reach.

"YouTube is trying to help advertisers buy media inventory in a way they understand," says Jared Belsky, president of 360i. "But the dream of digital is to only pay for things that are completed and watched and real. This looks like walking back on that a little bit."

Google declined to comment beyond a blog post announcing the new ad product. And it did not say what the new way of buying would do for pricing.

It's likely that buying on an impression basis means individual views cost the advertiser less than completed views under the standard way of buying.

"It's great that YouTube is advancing this reach metric," Belsky says. "However, the promise of digital advertising in video is true accountability to a sale or to something more important than just reach and frequency. That's not enough. ... But you have marketers who are comfortable with how reach works for traditional TV."

YouTube does offer similar ad formats that tie to those other more direct goals, too, of course.

Google has never revealed how often people hit "skip" on video ads. This new way of buying—going for the largest possible audience—could be seen as a clever way to tap new revenue sources.

"It looks like they made the calculation that with so many people skipping the ads, they'll make more revenue charging on a cost-per-impression basis rather than giving away five seconds of free branding," says Jim Nail, principal analyst of marketing at Forrester.

The digital industry has been trying to prove to advertisers that even the shortest views of their ads can impact brand affinity and sales.

"This format can help you to raise awareness among a broad set of customers," Google says in its blog post, which shows results from two early test partners, Pepsi France and Samsung Electronics America.

Television will still be the first option for most major brands, but YouTube, Facebook, Twitter and others are trying to siphon some of that spending their way with residual reach, the runoff from TV.

"Brands get to a point where it gets very hard to increase reach, particularly on TV," Nail says. "They end up pushing the frequency through the roof and it doesn't help the campaign. With digital they can get that reach, but they're not paying as much for it."

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