Kyncl tar­gets $220 b video ad mar­ket

As YouTube eyes next bil­lion peo­ple

Campaign Middle East - - FRONT PAGE -

Jamie Oliver is rub­bing shoul­ders with the TV star Sal Masekela, who has just flown in from Texas; Zoella is tak­ing self­ies with her fans; mu­si­cians from Clean Ban­dit and Rudi­men­tal are milling around. Wel­come to Google’s Brand­cast event for agen­cies and ad­ver­tis­ers.

De­spite ru­mours that Google was plan­ning to by­pass agen­cies al­to­gether, the re­ported £1 mil­lion in­vest­ment ploughed into daz­zling them dur­ing last week’s UK Dig­i­tal Up­fronts must have been ten times the size of any of its ri­vals.

In the melee, Robert Kyncl, the head of con­tent and business op­er­a­tions at YouTube, tells Cam­paign why he thinks ad­ver­tis­ers are flock­ing to the video plat­form.

“Our rev­enue has been grow­ing 50 per cent year on year. So, clearly, ad­ver­tis­ers are em­brac­ing YouTube with a very strong bear hug,” Kyncl says. “We have all the top ad­ver­tis­ers, we have a lot of small busi­nesses, and I think peo­ple are get­ting it and are in­creas­ingly in­vest­ing in it.”

YouTube at­tracts a bil­lion view­ers glob­ally a month, yet spec­u­la­tion sug­gests its ad rev­enues were only roughly $3.5 bil­lion in 2013 – a small slice of a global video ad mar­ket worth $220 bil­lion. Google does not strip out fi­nan­cial de­tails for YouTube.

Kyncl’s job is to boost rev­enue fur­ther and per­suade ad­ver­tis­ers to spend more run­ning pre-roll ads around prized YouTube con­tent. The abil­ity for users to skip ads they don’t like con­tin­ues to be a big sell with brands.

“If we are do­ing a bad job of match­ing the user and the ad, they’ll skip it. If the ad­ver­tiser is do­ing a bad job of cre­at­ing in­ter­est­ing ads, they’ll skip it,” he ex­plains. “The con­sumer only watches the ads they love… and that is clearly worth more.”

Given the high costs of run­ning YouTube – servers around the globe, free apps and 15,000 sales staff – the profit mar­gin must be tight.

Mean­while, com­pe­ti­tion is in­creas­ing – most no­tably, Face­book is set­ting out its stall in the video ad­ver­tis­ing space and has in­tro­duced a view counter.

But Kyncl ap­pears un­fazed, sim­ply ref­er­enc­ing an AOL Plat­forms study that found YouTube is more ef­fec­tive at con­vert­ing video views into sales than any other so­cial net­work, out­strip­ping its clos­est ri­val, Face­book, by “a sig­nif­i­cant mar­gin”.

Kyncl adds: “We have a very small mar­ket share of the to­tal video business. To­day, we are grow­ing in view­er­ship and rev­enue, so I hope that con­tin­ues for a long time.”

Part of the chal­lenge is that young users tend to spend short bursts on YouTube; even heavy users rarely spend more than an hour a day. This com­pares with the many hours peo­ple spend watch­ing TV or in­ter­act­ing with friends on Face­book.

But Kyncl is dis­mis­sive of TV. “They [young peo­ple] don’t re­ally watch it; it kind of plays in the back­ground,” he says. “YouTube of­fers en­gage­ment be­tween the cre­ator and the fan. The key­word is en­gage­ment – if you are

All a lot of ad­ver­tis­ers care about is reach­ing the right au­di­ence and not pass­ing judg­ment about the con­tent

en­gaged, the ads work bet­ter.”

But do peo­ple want to watch ad­ver­tis­ing on YouTube – does it not in­ter­fere with the fan/ star in­ter­ac­tion? “Ap­par­ently, they do want to see ads on YouTube be­cause our ads are skip­pable and there are a lot of them which are not skipped,” he says, though de­clines to give fig­ures.

Nick Burcher, the head of so­cial at Me­di­aCom, agrees YouTube has evolved sig­nif­i­cantly over re­cent years to of­fer myr­iad op­por­tu­ni­ties for brands, but says, to make the most of the plat­form, ad­ver­tis­ers need to think about the whole ecosys­tem.

Burcher says: “There are great op­por­tu­ni­ties for con­tent, con­tent pro­mo­tion and dis­play ad­ver­tis­ing, but real suc­cess comes from know­ing how and when to join ev­ery­thing up.”

To make nav­i­gat­ing the plat­form eas­ier for big brands, YouTube is in­tro­duc­ing Google Pre­ferred to the UK, fol­low­ing its ar­rival in the US in April. This of­fers ad op­por­tu­ni­ties on the top-per­form­ing 5 per cent of YouTube con­tent, which is se­lected us­ing an al­go­rithm that ranks chan­nels ac­cord­ing to hits, pop­u­lar­ity and en­gage­ment.

Google Pre­ferred is seen very much as YouTube’s play for TV ad­ver­tis­ing bud­gets, as it is sell­ing broad­cast-style con­tent rather than spe­cific au­di­ences. In words that will surely rile those in the con­tent business, Kyncl says: “A lot of ad­ver­tis­ers do not care about the con­tent that their ads are as­so­ci­ated with – all they care about is reach­ing the right au­di­ence and not pass­ing judg­ment about the con­tent.”

He says th­ese ad­ver­tis­ers will con­tinue to use the auc­tion process to reach those au­di­ences. How­ever, he adds: “We have ex­panded the choices – we are giv­ing them yet another way to buy YouTube that is sim­pler and is served on a sil­ver plat­ter.”

Ac­cord­ing to Kyncl, since be­ing in­tro­duced in the US, the ad slots around the al­lo­cated con­tent have “sold out”. Now num­ber two at YouTube to Susan Wo­j­ci­cki, Kyncl’s am­bi­tion is firmly on reach­ing “the next bil­lion peo­ple”.

Kyncl…‘We have all the top ad­ver­tis­ers, we have a lot of small busi­nesses, and I think peo­ple are get­ting it and are in­vest­ing in it’

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