On Wednesday, Google released a European research study that claimed YouTube delivers a higher return on investment than TV ads most of the time. Lindsey Clay, the CEO of UK commercial TV marketing body Thinkbox, responds.
Despite their continued, almost obsessive attempts to knock TV it’s actually good news that Google has begun to look at advertising effectiveness on YouTube. All arguments about ad investment should be based on proof of effectiveness.
But there are no surprises in their study – seeing a good return on investment (ROI) from online video’s relatively low levels of spend shouldn’t surprise anyone.
But the trick is to have good ROI when spend levels increase and keep increasing, to keep delivering ROI.
That is where TV is very different.
“Don’t confuse high levels of ROI with high volumes of profit”
In their haste to benchmark themselves against the high performance of TV, Google must know they are missing the point: the true value of TV advertising is not just its great ROI, but that it continues to deliver superior ROI and, critically, volume at high levels of spend – and continues delivering for a long time afterwards.
Around 50% of the effect of a TV campaign is felt in the year after broadcast, which is long after most ROI studies have stopped measuring effects.
These are some the reasons why TV builds brands better than anything else and creates the most profit. Don’t confuse high ROI (an efficiency measure) with high volumes of profit and long-term success. Of course advertisers could spend more in online video, but presumably only until the point of diminishing returns, when ROI falls.
The challenges for YouTube in attracting greater investment are skippability and scalability. YouTube’s skippable ad model has an obvious impact on how much advertising is actually seen.
And if brands did increase their spend on YouTube, they would likely see their ROI fall given YouTube’s challenges as a medium; the bulk of YouTube viewing is by a relatively small group of super-users (80% of viewing is by 20% of viewers) and YouTube has a limited amount of the premium content advertisers want to associate with.
The majority of YouTube is a long tail of UGC (user-generated content) and it could only satisfy more advertisers by monetising this long tail.
TV on the other hand has the quality and volume of content to accommodate many thousands of advertisers with proven effectiveness at high levels of investment.
Advertisers can keep investing in TV and see higher returns for longer.
Google doesn’t “want to shift money from their left pocket into their right, so they end up giving advertisers poor advice”
As for not attacking TV, Google’s Debbie Weinstein is being rather coy when she says Google just wants to help advertisers make the right decisions. Advising them to take money away from TV as they have previously done explicitly – and are now doing more implicitly – does not help advertisers; it undermines their overall campaigns as TV not only achieves great results by itself, it fuels the performance of other media, including online video.
But we can understand the difficult position Google is in. They want more money for YouTube but the obvious place to take that from – if you base it on advertising effectiveness – is from the under-performing, worryingly fraudulent world of online display in which Google is such a significant presence.
But they don’t want to shift money from their left pocket into their right, so they end up giving advertisers poor advice.
“All video budgets should rise”
Our view is that all video budgets should rise, including YouTube’s. We have said this for a long time. But this should be funded by using money from less effective advertising budgets, such as online display – or by increasing ad budgets overall.
There should be a rising tide to lift all video boats. But it makes no sense to try and torpedo the highly effective TV budgets.
This is why we welcome the comments from the advertisers involved in Google’s research who make it clear they see online video not as a replacement for TV, but as an addition and a complement.
Questions remain over how Google did this research – how they selected the 56 case studies involved for instance and their role in the analysis.
We don’t expect many advertisers to move money from TV to YouTube because they know and see on a regular basis what TV advertising does for them. They know that services like YouTube can complement TV, but they can’t replace it.
What Google’s study really shows – as the research companies involved also make clear – is that online video is a better advertising investment than other forms of online advertising.
It is great to have more proof of this and we would expect budgets to move from this poorly performing advertising into video of all kinds, including TV – broadcast and on-demand.