The Relationship Between Users, Advertisers and the YouTube Platform

The three primary ingredients to video on YouTube are entertainment, education, and inspiration. These are what make the YouTube platform what it is today. If I can compare it to anything, I would say it is like the start of the internet, and we began to understand how powerful the tool of information at our fingertips could be. YouTube is similar in the sense that we are finding out that this platform can provide an insane amount of value while maintaining its organic discovery opportunities for users and influences. Moreover, I think search is a great online ability to help us answer questions while YouTube is a similar experience allowing us to solve problems. Additionally, we are learning to engage with video and people in a way never experienced prior, insert e-marketer stat. (here).

 

In the YouTube ecosystem, you have three core players. Users, YouTube, and Advertisers. All of which need each other to create an ecosystem beneficial for all parties. Let’s start with the platform. First and foremost, YouTube is a video hosting website for users to upload content. This material segments into categories based on tags, descriptions, headlines, and video. The video is then eligible to reach users through search, channel page, watch page, external website, subscriber feed, homepage, and other areas. Google search plays a significant role in the growth of YouTube, and it’s user base. Nonetheless, the platform is a fantastic tool for discoverability of video content across diverse genres. While many other platforms provide entertaining video, I think YouTube sets itself apart with its educational, how to, do it you section & community. There is no place on the web where you can find out how to do so many simple tasks that you may not have ever learned or needed in the past. This transaction of viewer time for educational content is a relationship that adds value to the user. Experience is more important today for marketers than ever before. Real experiences translate to increased advertiser/product sentiment and word of mouth / social proof opportunities.

 

Users are a unique piece of this puzzle as it appears they have the most control, specifically as it pertains to their viewing habits. Views and Watch Time are increasingly important metrics to YouTube and primarily because they prove engagement to advertisers and can charge a premium for that. Therefore, the TrueView format allowing users to skip after five seconds is a new format for users and in my opinion has had a severe impact on user retention, behavior, and platform sentiment. The TrueView model gives more to the user than any advertising exchange previous. Being able only to donate five seconds and then have a choice to engage with the ad has created a value exchange that continues to grow in acceptance. YouTube also doesn’t show an ad before every video and also shows non-skippable ads in the :15 and :30 variety usually purchased on a CPM / reserved guaranteed basis.

 

The platform is in a unique position because it is built by the fans and early adopters like many of the social media platforms previous and thus held to a standard when it comes to the product and service. The platform also must maintain a different relationship with the publisher providing them the best opportunity to reach their target audience at scale. Additionally, the format and pricing model can’t be a one size fits all and must be flexible by an advertiser. Lastly, the platform must differentiate itself from the competition with unique marketing opportunities that can be tested and evaluated. Sitting in the middle, between user and advertiser the platform is in a seesaw position trying to maintain even distribution. A video platform that increases watch time and provides a great user experience while also leveraging proprietary actionable data for advertisers combined with an engaged audience that can take advantage of by any brand or product in various different formats will be rich in user engagement and profitability.

 

If we look at the competitive duopoly Facebook and Google, we’ve seen a tit for tat type of relationship when growing their audience and marketing suites. I’ve seen Facebook completely rework their video offering, cost model, and hosting framework to match YouTube. While in the most recent shift to people based targeting combined with additional available data sets for search, display, and YouTube (HHI, Custom Affinity, YouTube Audiences) for the YouTube platform is an extreme pivot to the normal data hoarding Google. But the platform needs to be competitive against the largest data warehouse known to humanity that is Facebook. The competitive environment breeds innovation and disruption, and one of the unfortunate pieces to this duopoly is the fall of the ad networks, exchanges, and other technology middleman sitting in between the advertiser and publisher. Think about the data competitive advantage that lies within the search, social, and video information tied together with people based login data to create full cross-platform targeting and attribution. To do this with any other network, it would require the data network, supply platform, demand exchange, device targeting provider and publisher diluting any performance while never learning a thing from the discrepancy ridden reporting.

 

Lastly, the advertiser is in the driver seat because of the hot market and shifting ad spend from television alongside the organic growth. The competitive aspect of the industry has fueled innovation among targeting, video, mobile, and social. We can reach users narrow and wide with programmatic solutions that require no minimum spending levels. As we continue to watch this industry grow, Advertisers and agencies will have a first mover advantage analyzing multiple products, services, and the results that flow from these partners.

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