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TV Commercials Vs YouTube Ads Explained

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TV Commercials Vs YouTube Ads Explained

December 12, 2013 by Jake Larsen

How You Can Take Advantage of the Disruption in Advertising

When I worked at Fox Entertainment in LA, I was able to talk to several executives and leaders in the television industry.  They were worried of the future because of the massive disruptions that’s been going on in advertising.  Believe it or not, advertisers are willing to pay big money for your attention.  TV stations make billions of dollars by renting out your attention to advertisers.  When you watch the Bachelor, Breaking Bad, the Walking Dead or (Insert your favorite TV show here) These TV stations sell your attention to advertisers through commercials.  So when you start fast forwarding the commercials, the TV stations no longer have your attention, thus making the advertisers’ commercials worthless.

Our attention has been transferring from TV to YouTube.  YouTube is doing to TV what TV did to the radio.  Slowly killing it.  I’m not saying that YouTube is replacing TV because there will always be a need for it.  Even radio is still around and has it’s place.  But the value that TV brings to consumers and advertisers is decreasing.

Their problem is our opportunity.

Gone are the days of forced advertising watching and seeing ads that we don’t want to see.  The tables of power have turned from the advertisers to consumers.

TrueView (YouTube) advertising allows consumers to skip an ad if they’re not interested.  It also allows advertisers the ability to hyper target their ads at an affordable price.

The billions of dollars that are being so carelessly spent on TV will inevitably flow to YouTube.

Everything that YouTube ads are, is everything TV commercials aren’t; Engaging, Targeted, Affordable, Trackable, Relevant and the Future.  The ability to hyper target an audience in Trueview is unreal.  For example, anyone can create an ad that…

  • Targets males,
  • Are 25 years old
  • Interested in technology
  • Who use an iPhone
  • Live in San Francisco

To top it off you, the advertiser only pays if the viewer watches half of the ad or 30 seconds.  Whichever comes first.  It’s performance based advertising.  No longer a shot in the dark hoping to hit something.

The analytics learned from the advertising campaign is just as amazing as the targeting ability.  Advertisers can know…

  • Number of times the Ad was played
  • Number of times the Ad was clicked
  • Where the Ad was shown
  • When the Ad was shown
  • How much of the Ad was viewed
  • If a product was purchased afterwards
  • What the Cost Per View is
  • What’s the conversion rate
  • What’s the Cost Per Conversion / Customer Acquisition

 Compare this to the TV Model.  Give us $200,000 and we estimate that your message will be shown in 500,000 households.  Whether people actually watched your Ad we don’t know.  They may be in another room when it airs.  We also don’t know if the viewers actually did anything after the commercial.  Did they drive to a store and purchased your product? Probably not.

There’s so much valuable data gained in online advertising that just isn’t possible with old media (TV, Print, etc)

For this reason, I’ve been calling YouTube the Wild West for a while now.  It’s new online real estate that is high in demand but low in supply.

The CPV (Cost Per View) in YouTube is now where the CPC (Cost Per Click) in Search was 10 years ago.  Low cost real estate that will grow by 1,000% in the next 5 years.  Since Google owns YouTube this is all done in the Adwords platform.

Think of the massive dent that Google has placed in the universe in the last ten years.  What Google will accomplish in the next ten years will make this dent look like a small scratch.

Do you agree or disagree?  Do you think YouTube will take out TV commercials? Why?  I’d love to hear your thoughts.  Especially if you disagree.  Please voice your opinion in the comments below…

Filed Under: Why Video, YouTube Advertising

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