YouTube is best known for being an ad-supported social video site that’s free to the average user, and it’s become the home of a host of social influencers who are, themselves, supported in part by the ads aired with their videos. However, YouTube has started to shake up the paradigm by creating the alternative paywalled service, YouTube Red. The shift toward ad-free subscription content isn’t unexpected, from a user perspective, but it could have a huge impact on how marketers reach audiences with video marketing.
How YouTube Red Works
Advertising itself as “It’s YouTube, Uninterrupted,” the subscription service costs $9.99 per month, which gives users a 100% ad-free experience as well as a collection of other perks, including access to Google Music at no cost. In addition to YouTube becoming ad free, the service also includes YouTube Music and YouTube Kids. As a paid subscription, YouTube Red provides non-stop audio that can run in the background on mobile devices, a major bonus for those listening to music who want to utilize other apps at the same time, as well as offline access to video and music content. The biggest limitation seems to be availability: only select countries have permissions, including the United States.
Most importantly, the service provides exclusive, ad-free, original content. (Even if a country doesn’t have access to the subscription service, they may be able to buy this content on Google Play.) YouTube Red Originals include a lot of faces that YouTube users adore, i.e., YouTube famous influencers like PewDiePie, Rhett and Link, and Michael Stevens’ Vsauce. The service included 27 original series and movies in its first run, and a total of 40 originals are slated to be produced this year alone. This isn’t limited to vlog-based talk shows, either. Rhett and Link, famous for their talk-show style series Good Mythical Morning have become supremely popular with the scripted show Buddy System. A major difference between YouTube Red content and competitors like Netflix is probably length, at least for now. For instance, Buddy System episodes in season one were roughly 12 minutes long, but season 2 is extending to 22 minutes per episode, or the length of a standard sitcom.
What This Means for Marketing
Unfortunately, at this time, YouTube Red for marketers doesn’t exist. Even influencers are facing an awkward toss up between being funded by subscription service (which doesn’t currently supply much of their own revenue) that allows them to avoid the impact of ad-blockers and being supported by advertisers that can threaten their hard earned trust and authenticity. The existence of YouTube Red makes it that much harder for a newcomer to capture attention, as well, which in turn makes it harder for advertisers to select advocates at all.
Finding a new advertising channel maybe an option. New video marketing channels pop up all the time. Even Snapchat, with its raw, unfiltered and hyper-authentic user content, is pitching TV shows to major networks. It’s producing original programming, specifically 5-minute shows, by partnering with ABC, NBC, and BBC. A host of other networks, like Disney and Fox, may be stepping up to the plate. Unlike YouTube Red, Snapchat shows will have a “presented by” sponsorship with advertisers. All of this is still in the development stages, but Facebook and Instagram are both looking at following suit.
Taking advantage of traditional YouTube options may be the better choice in the short term, but marketers are going to have to step up their game in terms of original content. That will mean taking a page from brands like Red Bull, which was the most shared video brand of 2016, garnering more than 27 million shares, which is tens of millions ahead of the number two spot, Samsung, and nearly 20 million ahead of number three, McDonald’s. Red Bull’s content includes sports and music videos and relies on an always-on, experiential perspective. Perhaps brands like this will have a channel of their own on YouTube Red at some point in the future, but if they will, it’s going to be because they offer stellar content that people are willing to pay for.
Outlook for YouTube Red
What’s in store for the future of YouTube Red remains to be seen, namely because the service is still in its infancy. Its limited availability means it’s dwarfed by its ad-supported counterpart, which leverages user numbers that account for one third of all people on the internet compared to Red’s 1.5 million paying subscribers and 1 million trial users, and revenues are still small. The outing could be viewed as an experiment, and it remains to be seen how long Google and YouTube will give it to grow. According to YouTube CBO Robert Kyncl, that will probably be at least another year.
Then there’s also the question of YouTube TV, the brand’s outing into live streaming TV aimed at cord-cutting Millennials. The service only rolled out in Spring 2017, but it’s already tripled its footprint. That service runs traditional-type TV ads, with a traditional (albeit unlimited) DVR service. It’s also going to provide YouTube Red Originals on special channels without access to the other benefits of YouTube Red.
What This Means for Marketing
Quite simply, YouTube Red is still evolving, and neither Google nor YouTube have found the iteration that will turn out the best results for their business. In fact, ads are likely to be making a comeback in future efforts, although how much that actually impacts YouTube Red is a little unclear. In May’s Brandcast Extravaganza for the Digital Content NewFronts, Kyncl promoted a new endeavor that will be ad-supported, citing the fact that YouTube is aware that “big brands and big agencies are our biggest partners.” That endeavor includes seven new programs with major celebrities like Katy Perry, James Corden, and Kevin Hart; these shows will be supported by ads. The implication Kyncl made is that YouTube is trying to find a way to balance the share shift toward ad-free programming with the need to work with marketers, and we may just end up seeing brand integration with programming.
Video marketing is evolving as quickly as the technology that people use to watch it evolves. The future of YouTube Red may be in flux, but it provides hefty insight into the type of content that users want to watch, and which companies are actually willing to provide. Marketers are increasingly responsible for value in the ads people are willing to watch, as well as content that will allow brands to side-step the ad-skip impulse for cord-cutters and cord-free generations. It’s time to sit down and take a fresh look at your marketing tactics in order to keep up.