Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) has transformed itself into an advertising powerhouse, and now the search giant wants to do the same with YouTube. Management is focusing on four key priorities in an attempt to speed up the pace at which marketers are switching their ad spend from TV to the web. Analysts at Bernstein believe Google’s YouTube and other online properties are already stealing ad dollars from TV and that the only question now is how quickly the pace of this shift is going to speed up.
Google’s YouTube no long just “cats on skis”
In a report dated May 1, 2014, analysts Carlos Kirjner and Peter Paskhaver say Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) has done a lot to improve the quality of the content on YouTube. They note that today, a lot of what can be found on YouTube is far better than what used to be very low quality, amateur videos. The content also tends to be attractive to advertisers, unlike the content which used to be there, which they say wasn’t much more than just videos of “cats on skis.”
They note that Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) bought YouTube in late 2006, but it wasn’t until about 2009 or 2010 that the company began to shift the content away from user-generated content. However, this believe that this time frame suggests YouTube could be “fundamentally different and better” in just three or four years.
Making things easier for YouTube advertisers
The Bernstein team attended Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s BrandCast event, where the company showed off its new products. One of those products was YouTube Preferred, which is a set of 14 “content line-ups organized for advertisers by content type.” The YouTube channels that are selected to be part of the Preferred segment are chosen from those in the top 5% of content on the site. The analysts believe that this is Google’s attempt to make it easier for advertisers to purchase inventory on YouTube. The company also said it is offering guaranteed audiences to advertisers who buy slots in YouTube Preferred channels.
They also note that Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) is using legacy metrics in order to capture some of those legacy TV dollars. The company emphasized again that it has partnered with comScore and Nielsen to measure its content. This again makes it easy for advertisers to measure and then buy inventory using the same metrics they would use when buying legacy TV ad slots.