YouTube moves toward premium in bid to attract advertisers

Short-form video giant YouTube put its position as the top online video provider into play during its third annual "Brandcast" at Madison Square Garden, as it tried to woo advertisers to spend more on the service. It's banking on a new platform for ad spending called "Google Preferred."

Google Preferred will reserve the top 5 percent of content in its highest-rated sections--such as food, music and entertainment--for major advertising campaigns. "The initiative is likely aimed at advertiser sensitivities over associating their brands with less distinguished content on YouTube's vast depository of video," Variety's Andrew Wallenstein wrote.

Additionally, YouTube is guaranteeing marketers that they will reach the full scale of the audience they are targeting, the article continued.

That Google-owned YouTube is making a power play for advertising dollars isn't surprising. The service is already more successful at attracting advertisers than other large players like AOL, Pandora and Millennial Media, chalking up an estimated $5.6 billion globally in gross revenues during 2013, according to a December eMarketer report. If correct, that would equate to a 51 percent leap from 2012's estimated gross, and make up about 11 percent of Google's total ad revenues, according to AdAge. (After adjusting revenues, YouTube likely made a net $1.6 billion globally, but that's still a stratospheric 65.5 percent increase over 2012, eMarketer said in a blog post.)

DigitasLBi is the first agency to partner with YouTube through Google Preferred, CEO Robert Kyncl said during the presentation Wednesday evening.

But a reserved spot alone is likely not enough to land big-name advertising campaigns. YouTube is countering this by promoting some of its biggest "stars," creators like fashion video-blogger Bethany Mota, whose YouTube channel is extremely popular among 18-to-34 year-olds. (If you watched network TV last week, you probably saw YouTube's commercial promoting Mota along with makeup expert Michelle Phan and super-baker Rosanna Pansino.)

Reserving ad spots around these top channels could be a big revenue magnet for YouTube. "A commercial that runs before a video upload is of a certain value; an advertisement for a girls' clothing company before one of Mota's videos is much more valuable," a Mashable article said.

Other speakers at the Brandcast event included new CEO Susan Wojcicki, as well as CEO of Vice, Shane Smith, and notably, Pepsi CMO Frank Cooper, who said the soda company is increasing its YouTube spending by 50 percent.

Dreamworks TV is also launching a family-oriented YouTube channel this summer featuring original content, one which grew out of its Awesomeness TV acquisition, the company announced at the event. Dreamworks and YouTube have become more intrinsically entwined in recent months, partnering in January to present "YouTube Nation," a series that looks at top trending videos on the site.

For more:
- Mashable has this story
- Variety has this story
- AdAge has this story
- WSJ CMO Today has this post

Related articles:
YouTube and DreamWorks Animation partner on 'YouTube Nation'
Premium online video content could siphon TV ad money, analysts say
BroadbandTV signs FremantleMedia to YouTube content management deal
Middle schoolers aren't charmed by Netflix
Can online video advertising outpace TV ads? Skeptics sound off

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