YouTube Ramps Up Its Advertising Game To Take On TV, Thwart Yahoo

YouTube has revamped its strategy for grabbing dollars from TV networks: beat them at their own game. Utilizing a strategy long owned by television and previously only tested in small markets by YouTube, the video aggregate site is guaranteeing marketers that it will run ads in a more narrowly defined focus via their Google Preferred program.

NMR will try and break this down from the complex systems engineered by savvy marketing executives into more whimsical elements that get to the bottom line of how it affects you: the creators.

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Every year, there is a big meeting of marketing people and people with content that needs advertising to pay for it. They call this period the “Upfronts.” At these Upfronts, executives try to get as much money allotted to them as possible from the marketers. TV networks usually do this exceptionally well. So well in fact, Google-owned YouTube said, “Hey, we need to refocus our strategy to get some of that moola.”

Then big advertisers and marketers said, “You know, YouTube, you are just so big and massive, we don’t know that our money is being well spent. How do we know that the specific people (demographics) are watching the commercials we want watched?”

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And YouTube said, “Well, we do our own analytics. Here is proof.” And YouTube showed the marketing boys and girls their numbers.

“Well, not that we don’t trust you,” said the biggest of the marketing executives, “but sometimes less reputable companies try to pull the wool over our eyes by making up numbers! Why can’t you do what TV does and use outside companies?”

And so YouTube did — now companies like Nielsen track the ratings for YouTube. But that wasn’t enough for YouTube, who actively was trying to be the very best. And so they came up with a plan to manage scarcity (No, not Scar City; it’s a combination of “scarce,” meaning “rare” and “ity,” meaning “lots of”). So in Google Preferred, YouTube wanted to create lots of rare popular programs for marketers to get excited over — like TV does. Since there is only one “Modern Family” and one “Big Bang Theory” those shows enjoy scarcity.

Screen shot 2014-03-31 at 7.19.02 PMSo now they’ve managed to do it by saving the top 5% of programming on YouTube for marketers and advertisers who act fast. If they commit to YouTube during the Upfronts, something they’ve been hesitant to do in the past, YouTube will guarantee them great views — and their new friend Nielsen will confirm it. And by saving the top 5% for key marketing dollars, it actually opens up the advertising access to a whole bunch more YouTube creators than it ordinarily would have if YouTube had kept with their old system.

Everybody will win — except Yahoo, who came to the party late and didn’t get any of the pie.

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Believe me, if I had more time, I would have made this into an illustrated children’s book. But if I got it all wrong still, feel free to yell at me in the comments below.

Here’s more business news for you to consider:

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