Is Ad Skipping Set to Become an Industry Standard for Video Advertising?

YouTubeAs YouTube launches its ad skipping feature, Trueview, for mobile video advertising, it’s worth considering whether the rest of the industry should be following suit and allowing users to skip more ads. With Trueview, advertisers don’t have to pay for ads until 30 seconds of the ad has been shown and the user is given the option of skipping after 5 seconds. Although it may seem counterintuitive for ad skipping to be generate, Google insist that Trueview has played a big role in driving up revenue on YouTube.

And those revenues are now huge. Citi’s Mark Mahaney (as reported on All Things D) has predicted that YouTube will deliver a whopping $3.6 billion for Google this year, which will net the company $2.4 billion in profit after paying out to partners. But is the ad skipping model one the wider industry could benefit from, or is it something that only a company with Google’s resources and YouTube’s massive pool of inventory could pull off?

Establishing the viability of a Trueview-style system would require a cost-benefit analysis that takes into account: (a) whether the uplift in traffic, net revenue and engagement outweighs the revenue lost through skipping; (b) whether advertisers are willing to pay a premium for that engagement, assuming of course that non-skipped ads really do deliver on their promise of higher engagement levels; and (c) whether we’re likely to see any increase in ad skipping in the future, or will the percentage of people who skip stay reasonably steady or even decline.

Not for Everyone?

However, another thing to consider is that Trueview might be a YouTube solution to a YouTube problem. You might remember that YouTube had a difficult time monetising its UGC for many years, during which time the company had a massive pool of inventory that – display ads and overlays aside – was essentially going to waste.

People were flocking to YouTube in droves, but brands were reluctant to go after those eyeballs for fear of having their brand appear alongside a video of a squirrel being happy-slapped by Al Qaeda. So the vast majority of YouTube’s videos were essentially remnant inventory that needed to be monetised.

YouTube Skippable Ad, Trueview

Enter Trueview and Adwords for video. Trueview reinforces the idea ‘cost per completed view’ model with the idea that the user made a conscious decision to watch the ad, which has been a great way to differentiate YouTube in the marketplace. Plus it also fits in with the performance-focused positioning and pricing of the other Adwords products, where users only pay for clicks.

An Option for Long-Form?

So if Trueview is working for YouTube, will it ever be something that could be used for more expensive premium and/or long-form content? At this point it seems unlikely, and unnecessary if reports from other companies in the space are anything to go by. One such report was released by Freewheel earlier this month, which suggested that viewers are in fact quite willing to sit through longer, almost TV-like, ad loads when viewing long-form content online.

It’s also important to bear in mind the impact ad skipping could hav on the expectations of your site’s visitors. Once introduced, it might be hard to take skipping away in the future, which could be perceived as a hostile or ‘greedy’ move, and could prove particularly troublesome on community-driven sites like YouTube. Even now, YouTube is playing a slightly risky game with the YouTube user experience by allowing some ads to be skipped, while others – particularly on content from broadcasters like Channel 4 – can’t be skipped, which makes the unskippables doubly frustrating when you encounter them.

And then of course there’s the bigger picture to consider. As quality video inventory is so scarce, at this point in time there’s no incentive to waste inventory you’re already successfully selling; unless of course you have a lot of unloved UGC on your hands or believe you really can transform the uplift in traffic and engagement into additional revenue.

It would be interesting to see some hard data from YouTube on the Trueview model to see if the ads really are more effective, not only with short-term online engagement metrics, but also when it comes to things like brand sentiment and recall. And to understand more about what ad skipping – or choosing not to skip – really says about user behaviour. For example, while not choosing to skip an ad could be interpreted as a successful view by one person, it could also be argued that when the skipping feature is not being used, the user is less likely to be looking at the ad.

But regardless of whether the rest of the industry decides to ape the YouTube model, it’s very clearly working for YouTube and for users of their site. And even though ad skipping was in all likelihood subjected to the famously rigorous testing process that all Google products go through, it was still a brave and imaginative move, and one that will have a ripple affect on most of the industry, even if it’s just another step towards more accountable advertising.

Alternative Ad Skipping Models

Introducing ad skipping doesn’t have to be an all or nothing exercise and there are products on the market that can help mitigate the risk of lost revenue while also giving your users more control over ads.

Two interesting alternative solutions have been launched this year. The first was Solve Media’s Type-In solution, which allows the user to skip an ad by typing in a brand message, which they say helps brand recall (as someone who doesn’t enjoy watching the clock on YouTube tick to five seconds, this is surprisingly appealing to me personally). Then in April SpotXchange launched SkipIt, which allows users to top up a pre-paid account and then pay $0.10 for each ad they skip.

*Here’s an idea that someone out there might be able to make work. How about a social share in exchange for skipping the ad?

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