YouTube Introduces New Ad Model

I almost never watch TV. Sure I watch a lot of TV shows, but I rarely manage to catch my favorite programs from the comfort of my couch as they are aired live. So, like many other Millennials, I turn to online formats like Netflix, HBO GO, and Hulu to catch up on what I've missed because I can access these portals from almost anywhere. And since it's so quick and convenient, TV viewership is moving rapidly into the online space.

Cognizant of this shift, Youtube has launched a new ad model to support its collection of video channels by selling channel sponsorships to advertisers. Within the Youtube platform already exists clusters of episodic content organized into channels. For example, some channels have themes such as "Young Hollywood," "Mom's View," and "Automotive."

The new ad model will allow brands access to 96 different YouTube channels via sponsorships. The sponsorship package includes standard display ads, overlay, and pre-roll video and deems the sponsor as the sole advertiser on that particular channel. Youtube will cover the cost of production, and then share revenue equally with the sponsor once the investment is reimbursed.

The model uses keyword targeting instead of demographic stats for sponsorship packages, so it's a great way to interact with different lifestyle communities on a platform they're already loyal to.
Brands such as Uniliver, Toyota, GM, AT&T and Lowes have already signed up for the new advertising format and are paying a hefty price. According to Adweek, the ballpark value for sponsorships is an annual $4 to $6 million, depending on the channel. Channel sponsors in the music, pop culture, and sports categories will likely cut the biggest checks.

As online video entertainment reaches the forefront of the digital space, the arena is sure to become more competitive. Since the new format grants brands exclusive share of voice among key influencers in particular channels of interest, this is an incredible opportunity for brands with engaging, consistently refreshed content to stake their claim.