YouTube championed the practice of allowing users to skip over its pre-roll and in-video advertisements after consuming a message for just five seconds, long before other video platforms and media outlets decided to integrate the same practice.
Now, YouTube appears to be moving in the other direction, taking a page from good, old-fashioned broadcast television.
At the company’s upfront presentation on Wednesday, executives with YouTube’s parent company Google announced the platform will soon offer 30-second ads that can’t be skipped when users watch a video on their television sets.
The unskippable ads will appear in content that YouTube deems “top performing” among those who use its app on connected TV sets — YouTube is available on pretty much every Internet-connected television — which YouTube hopes will court some traditional ad buyers who typically pay for inventory on broadcast and cable television.
“More and more, viewers are tuning into YouTube on the biggest screen in their home,” Neal Mohan, YouTube’s chief executive, said on Wednesday. “Viewers, especially younger viewers, no longer make a distinction between the kind of content they’re watching — when they turn on the TV, they want everything they love in one place.”
YouTube has quickly become the destination for younger audiences who want long-form content, with some of its top creators enjoying revenue share agreements with the platforms that can earn them tens of thousands of dollars a month.
At the same time, the platform has struggled to attract and maintain advertisers over the last few financial quarters, with its balance sheet disappointing Wall Street and shareholders alike. In April, Google said advertising revenue from YouTube earned just $6.693 billion during the first three months of the year, a 15 percent decline compared to the $7.963 billion earned during its previous quarter.
While most media companies would do anything to have that revenue, it isn’t particularly good news for YouTube, which logged more than 150 million unique streamers in the United States along for the month of December. That earned YouTube the distinction of being the most-trafficked streaming video service in the country, and one of the biggest in the world. Investors and the company’s own executive team expected better.
YouTube’s problems are not entirely of its own design. Like other media companies, YouTube has experienced a pullback in advertising spend from companies who have tightened marketing budgets as higher inflation and fears of an impending recession continue. The issue has hammered traditional media companies like broadcast radio and television the most.
But what makes YouTube’s situation unusual is that companies who are buying ad inventory have increased their marketing spend on Internet-based services like streaming video platforms and podcasts. YouTube’s unskippable ads might be part of the problem, as companies want to ensure whatever message they’re trying to convey is consumed in full, and transmitting that message might be tough to do in just five seconds.
Offering marketers the ability to buy 30-second ad inventory against YouTube videos gives brands the option to recycle the same spots they run on traditional television, and could court some of TV’s biggest ad buyers over to the streaming service.
Streamers who don’t want to sit through a 30-second ad will still have the option to pay for YouTube Premium, which removes all pre-roll and video insert advertisements and unlocks other features like offline downloads and the ability to watch content in a higher resolution. YouTube Premium costs $12 a month or $120 a year, and also includes access to Google’s streaming music service, YouTube Music.
