YouTube has become a content giant since its inception in 2005. The service has grown from a user driven / open source video streaming platform into a domineering tech giant producing its own original content, such as television shows, documentaries, and movies. Recent research has also shown that YouTube is closing the market gap between Netflix, the largest streaming service in the United States (reaching over 75% of Wi-Fi-homes). In comparison, YouTube now reaches roughly 53% of Wi-Fi-homes. This clearly demonstrates YouTube and Netflix’s stronghold in the marketplace as the nearest competitor, Amazon, reaches a mere 33% of the potential user base. For more information regarding the video streaming market shares per company, enjoy TechCrunch’s in-depth article.
One obvious difference between YouTube and Netflix is that the superstructure of their business models appear to be largely incongruent. YouTube built its streaming empire on a free, and subscription-less model predicated on selling space to advertisers as the majority stream of income for the company. Netflix is quite different as their service is almost entirely advertisement free, except for their infamous re-marketing tactics to encourage subscribers to watch more of their service’s content. Therefore, YouTube fundamentally faces a challenge unique to their style of business structure: rapidly changing advertising tactics to satisfy a more impatient brand of user.
YouTube’s decision to update their advertisement attribution criteria reflects the growing climate of internet users who demand more content and less noise between the initial click and the stream. Their official criteria changes mandate: ‘ad engagement’ as a user watching 10 or more seconds of an action ad (when using maximum conversions or targeting Cost Per Action (CPA) forms of bidding). Additionally, a conversion will now be counted as “…a user taking action on an advertisement within 3 days of an engagement”. This change radically reduces the engagement to conversion window, as YouTube’s original policies reflected a 30 second threshold for Engagement, and a significantly longer 30 day limit for conversions.
For more info on this change, check out Search Engine Land’s article. It encourages marketers to revise their strategy and tailor their content toward a much less patient service provider, YouTube, and a user who has the attention span of a mere 10 seconds. Another wrinkle to this situation is that YouTube is the child subsidiary of the parent Alphabet Inc. or Google. Google is incentivized to reduce and amend their policies related to YouTube advertisement engagement to reflect more positively on their Google Marketing Platform and Google Analytics 360 services.
The implications of this engagement redefinition is largely dependent on the actions of other streaming services and whether or not they alter their guidelines to follow Google / Alphabet’s trend. The ultimate fear is that targeted advertisements reformulate to meet the whims of exceedingly impatient users. Advertisers could also see a rise in their costs as shorter periods of engagement do not necessarily correlate to increased conversions, while advertisers would continue to pay on an impression basis. Essentially, impressions become much less valuable.
For creative agencies like Hero Creative, the window to outline a brand narrative without losing a user’s attention is crucial to effectively market our clients. We utilize the Google Marketing Platform and Analytics 360 Suite, so re-strategizing the long term increase in costs associated with advertising with our clients is vital. YouTube’s decision also indicates their desire to cater advertisements toward companies that do not market themselves locally. A shorter engagement window could phase out small to medium-sized businesses that don’t have large advertising budgets like multinational corporations.
The decrease in seconds of watched advertisements being categorized as ‘engagement’ empowers advertisers to craft more compelling content. However, the decreased timeline to qualify as a conversion swings the balance of power for marketers. As data of these changes by YouTube becomes available, the ultimate hope of analysts is an adjustment from 3 days closer toward the initial 30 day window for conversions. Everyone wants genuine engagement that leads to conversions so hopefully YouTube makes that change. In the meantime, check back with us for updates and any questions you have about making the most of your advertising efforts!!