YouTube is Trying to Walled Garden TV
The coming stare-down between agencies and Alphabet
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I was going to write something this week about how YouTube keeps having so many unforced errors that it’s killing a golden opportunity to steal a commanding share of TV advertising.
Then another would-be mistake reminded me that Walled Gardens like YouTube might just be able to do whatever they want. Even in TV.
YouTube’s summer of mishaps would be devastating for most companies. First, the Alphabet-owned site was found to be running ads outside of YouTube as part of an obscure program most advertisers didn’t even know existed.
Then just recently, YouTube ads were found to be targeting kids, using data in ways that potentially violates federal law.
Interestingly in both cases, YouTube didn’t do a mea culpa as in scandals past - but instead railed against the vendor that unearthed these errors - Adalytics.
I was starting to think that YouTube was already teetering on the edge of another advertiser boycott, when news hit that the video platform had decided to use its own co-viewing numbers to sell advertisers on its TV audience, instead of those from a third party. My initial response was, ‘wait, are you kidding? You can’t do that.”
I mean, just Look at the gymnastics that the TV networks are doing through to make sure that this slew of new metrics companies are counting TV viewing right, forming joint committees and testing new currencies with ever-careful baby steps. Having valid third party validation isn’t just important, it’s intrinsic to how the TV business operates.
Meanwhile, it feels like YouTube is just saying ‘use our numbers. don’t worry about it.”
Like I said, I was thinking this was going to blow up in YouTube’s face at just the wrong moment. Then I was reminded of how clout works.
@JamesBorowThe walled gardens are going to win. All these new commerce media networks need to embrace a version of the same playbook and build their own gardens and tools ASAP.
Conor McKenna, partner at Luma Partners, joined me this week on my Next in Media podcast. We talked a lot about the coming post-cookie world, where brands would be grappling with signal loss, just as AI comes into prominence.
That dynamic is going to create even larger advantages for platforms with scale and first party data. And brands are going to increasingly be leaning on AI buying tools like Google’s Performance Max, even if that means giving up some transparency and control.
“There are lots of calls for more transparency,” he said. “But if it works people are still going to lean into it.”
And only so many companies are going to have the volume and machine learning capacity to compete in this new world. Google is one of them.
So over time, does this mean that Walled Gardens will be able to grade their own homework more than they do now, because they are the only ones with the answers?
This would bring an entirely new dynamic to TV advertising. But no one player in TV is big enough to pull that off, right?
Well, consider that in July, YouTube accounted for 9.2% of all of TV watching, according to Nielsen’s The Gauge report. That’s all of TV, not just streaming. How long until YouTube garners 10%? 15%?
While that isn’t exactly the same kind of share as the big three networks of yore, that may soon be a commanding position, putting YouTube into must-buy territory for many brands. Plus, it’s worth noting that YouTube doesn’t just rely on traditional TV advertisers, but a long tail of smaller brands and DTC spenders.
To be sure, YouTube does allow co-viewing data to be measured and validated through other third parties like Nielsen and comScore through Google’s Ads Data Hub. And if brands want to transact using third party data, YouTube will provide Nielsen DAR guarantees. So it’s unfair to say that YouTube is totally flying solo.
Still, what’s to stop YouTube from doing what it wants with its owned, proprietary data? And why wouldn’t others follow suit?
Look at Amazon, which has convinced Nielsen to use some of its own data to measure Thursday Night Football. How long until Amazon just puts its own data out?
Maybe other TV players can try to pull this off. Since launching its ad-supported service late last year, Netflix has bent over backwards to appease the traditional TV community, inking deals with the likes of DoubleVerify and IAS. But as its ad subscriber base gets bigger, couldn’t you see the company saying to brands - who’s got better data on our audience than us?
Similarly, Disney boasts of holding proprietary data on 100 millions and 116 million devices. Is the company big enough to say it knows its users better than a third party? Maybe not yet. But if more TV companies come together through mergers and tech partnerships, it’s not out of the question.
In the near term, unless regulators take on YouTube over this issue (which is possible) it’s more likely is there will be a showdown between YouTube and buyers. And YouTube will keep doing what it wants until dollars go away.