Video Advertising
In today’s day and age, we are constantly surrounded by advertising, in real life and on the internet. According to the article listed below, video as a medium is the fastest-growing advertising category. Revenue from these advertisers allows people to convert their hobbies of creating and posting videos into an actual livelihood and a source of income. As a reference, PewDiePie who has the most subscribed to channel on YouTube, has an estimated annual income of $12 million, higher than Meryl Streep, Cameron Diaz, and Anne Hathaway!
Some statistics about videos and advertising: every minute, 48 hours of video are uploaded onto YouTube. The average click-through-rate (CTR) on video adverts is 1.84%, which is the highest CTR compared to other digital formats of advertising. Analysts predict that in two years, 69% of total Internet traffic will be video.
However, YouTube is not the only source of these videos; Facebook is emerging as a main competitor in terms of ad revenue. In one set of experiments and observations, Facebook had nearly 17% more link clicks than YouTube.
YouTube and Facebook have different platforms for video advertising and these discrepancies will likely lead to one site outperforming the other. YouTube advertising is done with a format called TrueView which is used to target specific channels or topics, not just certain keywords. Advertisers also have the option to re-market the video. Consequently, adverts are targeted to users based on their previous interactions with videos. YouTube charges advertisers per view where one view equates to 30 seconds (or the full duration) or when a user engages with the video.
On the other hand, Facebook advertisers customize the video in-house or upload the video to Facebook’s video player. The description and thumbnail is modified to better connect with the audience. Facebook utilizes autoplay where one view is counted after only 3 seconds. They charge a cost per 1000 impressions or the advertisers can bid on a cost-per-view basis.
In the end, Facebook is more appealing to advertisers because of the higher number of impressions and lower cost. This set-up essentially allows for the ability to reach a wider audience while paying less.
The information from the article is an example of a real-life application for the concepts covered in the course about advertising as a matching market. As a result of aspects like minimum costs per views, demographic data, interest targeting, and ad formats, advertisers seem to value slots on Facebook greater than on YouTube. Obviously, the usage of the internet and videos allows for advertisers to take advantage of the concept of keyword-based advertising. One can apply the principles learned in this class to analyze the data of advertising on Facebook and YouTube and make predictions about each one’s ad revenue. We can be sure that those working at Google and YouTube are crunching the numbers and trying to come up with ways to compete with Facebook to get YouTube back to the top of the market in terms of video advertising.
http://www.accuracast.com/articles/advertising/facebooks-killing-youtube-video-advertising/
http://www.independent.co.uk/news/people/forbes-names-pewdiepie-as-highest-earning-youtuber-with-annual-income-reaching-12m-a6695536.html