For Sale at YouTube: Political Ad Space in 2020
At a marketing event in May of 2019, YouTube CEO Susan Wojcicki announced that the video streaming platform had officially reached 2 billion monthly users. This reaffirmed its already very secure position as the largest player in online video by audience size. Since then, Alphabet Inc., YouTube’s parent company, has continually been taking major steps to capitalize on their large audience by offering the site as prime destination for advertisements. One of their most notable recent initiatives revolves around capturing ad revenue from political sources, especially as the 2020 presidential election nears in the United States. This has compelled YouTube to develop an entirely new tool for selling ad space on their website that would allow political campaigns to reserve slots in advance.
Historically, ad space on YouTube had been sold live through a Google auctioning mechanism. The system allows YouTube to list when space is available to advertisers on one of Google’s ad-buying tools. These closely resemble the ad marketplaces discussed in class. Each slot is given a price generally based on the number of clicks that slot typically receives. The advertisers will usually each have varying values for each click and compete with one another to offer a better bid for a given slot. It is important to note that this may be an oversimplification of the process as Google uses certain measures like the reputation of the company or the target demographic to limit who can bid on specific spots. However, at its base, the system is the same as the one taught in lecture.
Since YouTubes traditional method for selling ad space has proven costly for both Google and the advertisers, the company has overhauled it to adjust to the 2020 election season. YouTube developed a tool that allows political buyers to reserve ad slots on the platform well in advance of when they would be aired. Furthermore, the company explained that it would give campaigns the chance to directly target certain voting demographics. So, for example, Democratic candidates could choose to only display ads for those identified by Google’s servers as likely left-leaning voters in Iowa leading up to the caucuses in February. Executives hope that by demonstrating the ease and utility of their new tool, they will be able to earn a greater share of the nearly 5 billion dollars that will be spent on political TV advertising in the coming months. With certain candidates preferring certain demographics, it is likely that this development will streamline the auctioning process as buyers will have specific slots in mind beforehand.
Link: https://www.wsj.com/articles/youtube-tries-to-wrest-campaign-ad-dollars-from-facebook-and-local-tv-11570527000