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Despite an increasingly competitive environment in which established players and startups alike are venturing headfirst into video content and advertising, YouTube has continued to deliver strong financial results and robust usage stats. The Google-owned platform is poised for further success as marketers continue to regard it as an essential element in their branded content and advertising campaigns, according to a new eMarketer report, “YouTube Advertising: Why Google’s Platform Will Stay on Top.”
YouTube’s gross ad revenues worldwide will reach $9.50 billion this year, a 25.0% gain, eMarketer estimates. (Google does not break out YouTube revenues separately.) YouTube’s global net ad revenues—a figure derived after subtracting the company’s traffic and content acquisition costs—will reach $4.28 billion in 2015, up 40.6%. This means that YouTube’s net-to-gross margin will have improved steadily over the forecast period, indicating increased efficiency in its advertising operations.
Meanwhile, YouTube net US ad revenues will reach $2.22 billion, or 51.9% or the global total, in 2015.
Growth in YouTube’s net US video ad revenues will drop to 6.2% in 2017. During this time, YouTube’s share of the video ad market will also recede. These decreases reflect growing competition in the space as Facebook, Twitter, Yahoo, Vimeo and others push further into ad-supported video. However, even at a 17.7% share of total video ad revenues in 2017, YouTube will remain the biggest player in this area.
A key concern for marketers using YouTube has been the level of data and analytics the platform provides. A February 2015 survey of US marketers by RBC Capital Markets and Advertising Age found that two-thirds were “somewhat satisfied” with YouTube’s data and analytics tracking. Only 19% said they were “very satisfied.”
Agency and marketing executives interviewed by eMarketer expressed higher levels of satisfaction with YouTube’s data and analytics.
Andrew Hanelly, senior vice president of audience engagement at Manifest, said: “I would be very interested to hear where others are saying that they feel that YouTube ad targeting comes up short, because I think it’s a huge advancement from what we’re used to, and I think we’re getting spoiled in how we spend our ad and marketing dollars. For video platforms, YouTube does the best job of providing granular targeting opportunities at scale. It’s hard to not sound like a spoiled brat when criticizing YouTube, because it’s a marketer’s dream.”
Mark Aikman, marketing communications department manager at Mercedes-Benz USA, also spoke highly of YouTube’s data analytics capabilities. “As far as video metrics, it’s probably the gold standard,” he said. “It tells you how many views you’re getting, what’s the drop-off, where people came into your video from, where they viewed it.” [Editor’s note: Aikman has since become Mercedes-Benz USA’s general manager of marketing services.]
However, Aikman and others said they wished YouTube were better at sales attribution data. “It would be great if they could tell me how many watched the video and purchased with 100% accuracy, but some things I’ll have to wait for,” Aikman said.
Other executives noted that YouTube isn’t necessarily invested in giving advertisers a robust set of analytics.
“There’s a lot of data they have access to that they would prefer not to share because that enables them to have more of their special sauce,” said Steve Carbone, managing director and chief digital and analytics officer for MediaCom. “There’s a lot more data that we would love to have. And just because of the competitive nature of our businesses, it’s not in [YouTube’s] best interest to share some of that.”
Agencies and marketers offered mixed reactions to YouTube’s audience targeting capabilities. Some expressed dissatisfaction with what they perceived to be a lack of granularity, while others applauded this aspect of the platform.
“We can target by category, but if we want to try to target a specific audience, we’re limited based on how YouTube categorizes their targeting,” said Carrie Murray, digital media specialist at Audi of America. “So sometimes we run into limitations where it can be pretty broad.”
By contrast, Jeff Hinz, managing partner and US digital director at MediaCom, said, “Google has gotten better at its targeting capabilities, which allows us to target at a lower granular level.”
This range of reactions illustrates the challenge that YouTube faces in accommodating ad buyers with different needs. Most advertisers say they make as much use as they can of YouTube’s native capabilities and employ their own data, or third-party solutions, to fill in any gaps.
eMarketer corporate subscription clients can view the full report here.
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