YouTube has spent the past year preparing for an assault on traditional television, and now it is ready to pounce.
Heading into the spring upfront season, when media buyers commit to spending money on various TV networks, YouTube has begun openly petitioning marketing executives to ditch TV and spend their money online.
According to The Wall Street Journal, YouTube sees cable networks as being particularly vulnerable for two reasons: the networks do not have as many viewers as broadcast channels, and they have avoided putting content online so as not to damage their relationships with the cable providers that pay them a monthly licensing fee.
In order to target these cable networks, YouTube is telling media buyers that, for instance, they can reach more 18 to 34 year olds on YouTube than they can on E! or Comedy Central. Those comparisons are made more accurate — and more cutting — by a decision YouTube made in November to allow television measurement giant Nielsen to determine the number and demographic composition of people who see YouTube's ads.
To be sure, YouTube will be looking to siphon off a portion of television budgets rather than steal them outright. Though YouTube's ad revenues grew to $5.6 billion in 2013, eMarketer reports the platform's take was a mere fraction of the more than $60 billion advertisers spent on television in the U.S. alone.
The online video platform will attempt to further increase its share this season by reserving its highest quality ad inventory for those who commit to spending money with it ahead of time. WSJ reports that YouTube will hold back the best-performing 5% of videos in categories like Comedy, Food, and Sports for advertisers who buy in advance.
This assures brands that their money will be spent on video whose quality is at least comparable to what's available on television and creates a sense of urgency for ad buyers who might otherwise wait and see what other video options turn up on the web.
Finally, YouTube will reward marketers who make upfront buys by giving them audience guarantees, thought to be one of the primary advantages of advertising on television rather than the web.
An audience guarantee is a make-good that promises an advertiser its ads will reach a certain number of people in a target demographic. If fewer people in the demographic watch a show than the network predicted when it sold advertising time on it, the network then reimburses the advertiser with time on other shows until it has hit the target number.
Whereas YouTube has in the past refused to conform to TV norms like the audience guarantee and Nielsen's demographic ratings, it now seems confident enough in its offerings to offer brands a direct comparison to their options on cable.
How buyers spend their money this spring should give us a good idea of whether they, too, think YouTube is strong enough to beat cable at its own game.
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