Monday, January 23, 2017, 11:36 AM ET|Posted by Will Richmond
Last Friday, while most of the world was focused on the presidential inauguration, Google announced that YouTube advertisers will now be able to target their ads based on users’ past Google searches, as well as their demographic information. Depending how this is executed, there could have significant upside to YouTube’s advertisers, further incenting them to shift budgets from TV to YouTube.
In a blog post, YouTube’s director, product management Diya Jolly provided the example of a user who is searching for winter coats on Google and is then presented with video ads by a particular retailer on YouTube. No doubt we have all had the experience of searching for a product, only to have ads immediately start appearing in web sites we subsequently visit. The same would now happen, but with video ads on YouTube.
So the idea of using search data to inform ad campaigns isn’t ground-breaking. What is meaningful is that this data is now going to be married to YouTube, the 2nd-largest search site itself, and go-to video site for tens of millions of users daily. That means a massive volume of enhanced advertising opportunities is being created. Video advertisers will have much more precision in who they target, in turn improving the ROI of their ads (users will have the ability to “mute” certain advertisers in YouTube). The new targeting capability builds on a prior initiative called “Customer Match,” which allowed targeting based on user email matching.
All of this matters because it’s a further sign of Google’s ongoing ambition to move TV ad dollars to YouTube, further increasing the stakes for TV to keep up. Last week, I wrote about how TV networks are investing in data to make their ads more targeted and valuable, even as the long-term goal of turning TV into a more digital-like ad experience is still unproven. Now YouTube is coming at it from the other side, improving its data and targeting value proposition with a particular emphasis on cross-screen measurement.
Add in YouTube’s plans to launch a skinny bundle this year and Facebook’s own efforts in video and targeting, and it all illustrates the massive battle that is unfolding for traditional TV advertisers’ attention. And don’t forget that even as this competition intensifies, the number of viewers watching ads in the first place is declining. According to eMarketer, an astounding 43% of millennials now report that they’re ad-blocking. And ad-free SVOD services like Netflix and Amazon are surging.
It all adds up to a brutally competitive landscape for TV networks to maintain their dominant role in video advertising.