News

POV: Youtube's New Pre-Roll Advertising Model

Background:

YouTube is disrupting its pre-roll advertising model by testing out a new ‘ad pod’ format: a stacked pre-roll unit that will replace some desktop mid-roll ads.

Details and Implications:

YouTube identified a perfect storm in its data - increased viewing lengths and increased abandonment rates from multiple breaks in content. As a result of the trial some desktop viewers will now see two skippable pre-roll ads together, instead of one at the start and one midway through a video, with mobile and connected TV viewers to follow. The innovative ad format is designed to address the content abandonment issues by limiting interruptions in viewing. 

The introduction of the ad pods follows the launch of six-second bumpers two years ago and are based on insights unlocked from a deep examination of evolving video consumption habits and reactions to viewing interruption. Like online TV, the ad pod format gives users a commercial break with two messages and runs before or in the middle of a video – a common TV-like experience. It’s aimed to benefit both the user and the advertiser by decreasing the amount of times a user is disrupted during a video. Early data is showing that this is also increasing the amount of unique reach and frequency the platform can provide advertisers.

There has been some negative reaction on Twitter to the ad pod trial. However, in a blog post, YouTube revealed that its data from early tests shows that viewers experience up to 40% fewer interruptions during their viewing sessions. AdAge recently reported that YouTube will start streaming movies for free with ad breaks, something which would lend itself well to this new ad pod model.

There also seems to be a benefit to advertisers from the move to the ad pod model. In initial tests, YouTube data shows that advertisers are seeing up to an 11% increase in unique reach and up to a 10% increase in frequency. Increasing these early viewing metrics unlocks potential for advertisers to discover, test and optimize strategy, audience and creative. One important aspect to watch for as ad pods roll out, is bid levels for views or completes. With increased unique views for all advertisers, we may very well see a creep upwards on those metrics due to more advertisers being in more auctions.

Summary:

The ad pod model could be an innovation that helps bring new relevancy and utility to the YouTube platform by providing the user with an uninterrupted viewing environment and the advertiser with an attentive and receptive user. Future applications of the ad pod are intriguing. The application to connected TV and nod to traditional TV ad blocks shows how habits are shifting. YouTube says that it is now seeing users consume 180 million hours of YouTube on TV daily. Does this mean an ad pod can be used as a sequential storytelling medium throughout an entire binge session?

The initial stats seem to show that this is a win-win for advertisers and users alike as improved user experience leads to a happier user. The benefit to YouTube lays in its increased user viewership and increased audience discovery from advertisers.