Google has announced that the company is going to pull all YouTube inventory from AdX, the company’s ad exchange, early next year. From that point on, it will only be possible to buy YouTube inventory via Google’s own buy-side tools, Adwords and Doubleclick Bid Manager (DBM). This means that other non-Google DSPs will no longer have programmatic access to YouTube inventory.
Writing on the DoubleClick Advertising Blog, Neal Mohan explained, ‘To continue improving the YouTube advertising experience for as many of our clients as possible, we’ll be focusing our future development efforts on the formats and channels used by most of our partners. To enable that, as of the end of the year, we’ll no longer support the small amount of YouTube buying happening on the DoubleClick Ad Exchange.’
However, a number of industry sources told VAN they believe the move is more about strengthening the hand of Google’s DSP, Doubleclick Bid Manager (DBM), over its rivals in the DSP market. Maintaining full control over the sale of YouTube inventory also makes DBM and Adwords the sole sources of Google’s ‘TrueView’ formats, where the advertiser only pay for ads viewed for at least 30 seconds or until the end of the video. While TrueView and CPV pricing is viable for YouTube with its ever-growing stockpile of low-cost user-generated content (UGC), it will be extremely difficult for smaller publishers to compete them on a CPV basis when they have to pay to acquire or produce their own content.
Is Google Fuelling Antitrust Concerns?
It seems like a strange time for Google to be making this announcement. Even if you believe Google has the right to sell its inventory as it sees fit, this is very much an example of the tech giant using its position in one part of the market (YouTube/media) to give it competitive advantage in another (ad technology). In just over a week’s time (August 17th) Google will have to respond to the European Union’s Statement of Objections, which accused Google of using its role in search to favour its own shopping comparison product, Google Shopping. The European Commission’s is also investigating its use of Android, and whether Google has breached EU antitrust rules by ‘hindering the development and market access of rival mobile operating systems, applications and services, to the detriment of consumers and developers of innovative services and products’. In this goes badly for Google, it could lead to a $6 billion fine.
How will YouTube’s Creators and MCNs?
Many of the creators and multichannel networks who use YouTube’s platform have a love/hate relationship with Google, at least when it comes to sharing revenue. It’s going to be interesting to see how these players feel about Google turning away demand for their inventory from companies like AOL, TubeMogul, Videology, Tremor, YuMe, Turn, MediaMath, DataXu, BrightRoll, The Trade Desk etc. There’s little doubt that companies like Vessel, Facebook and Snapchat will be waiting in the wings, hoping to use this move as an example of Google’s ad tech interests affecting the creators’ bottom line.
While many will complain about YouTube’s move as being a regressive one, not to mention one that flies in the face of Google’s supposed commitment to open systems, it could also be argued that Google is simply responding to changing circumstances. And by circumstances, we mean the rise of Facebook, who have Facebook have been taking a similarly insular approach in building out its walled garden. There are others too of course. Sky, for example, have also been building out technology to combine with their media and data assets.
For advertisers, the programmatic dream seems to be over, at least in the sense that they won’t be able to sit down at a single DSP that’s capable of buying all of their media. As Vivaki’s Danny Hopwood told VAN in an interview last year, buyers will now have to deal with a series of walled gardens that combine technology, media, data and technology.