Dive Brief:
- YouTube in October began showing a selection of free, ad-supported Hollywood films and is promoting the films in the movie section of its site, AdAge reports. The free, ad-supported films, such as "Rocky" and "The Terminator," appear alongside movies that users can rent or buy through the platform.
- YouTube did not disclose its deals with studios or how it shares ad revenue with them. The platform serves ads in the movies from its usual pool of advertising demand. A recent viewing of "The Terminator" had ads from TJ Maxx and Lactaid, among others.
- In the future, YouTube could allow advertisers to sponsor individual movies, which would give viewers free access and exclusive screenings. But, this would rely on how film studios shift their business models to account for digital streaming, the company said.
Dive Insight:
Streaming Hollywood films is part of YouTube's efforts to offer more premium video for advertisers to reach the platform’s 1.9 billion monthly active users. Advertisers have been concerned with the platform's ability to ensure that their ads won't run near offensive content. Some brands pulled their ads from YouTube last year after ads appeared next to hate speech and terrorist propaganda, and Google Preferred, which was dedicated to directing ads to only the best videos on YouTube, featured questionable content, according to AdAge.
YouTube's new video offering also shows how the ad-supported video-on-demand (VOD) marketing is intensifying, as advertisers look for ways to reach viewers who are cutting the cord at higher rates. Walmart's ad-supported TV and movie app Vudu announced a partnership with interactive video technology developer Eko to create original, interactive content. Vudu is also planning a new shoppable video ad format for its free, ad-supported Movies on Us service that would give viewers the ability to purchase from Walmart.com. Amazon is also reportedly working on an ad-supported VOD app.
The advantage that Google-owned YouTube has over other platforms in attracting advertisers is its ability to target ads based on the vast amounts of Google data. YouTube could offer an ad product resembling traditional TV. Nearly 20% of YouTube viewing occurs on TVs, according to Ad Age. Google launched a new TV screens device type in October to let advertisers target YouTube audiences watching video on TVs through Chromecast, set-top boxes like Apple TV, video consoles and smart TVs. The ads on TV drove an average lift of 47% in ad recall and 35% in purchase intent.
YouTube has also been investing in more original programming, which video streaming services see as a way to stand out. YouTube is testing a new programming distribution model for its subscription service YouTube Premium, including adding more content in front of the paywall to attract subscribers. Now, some of the programming is ad-supported, while some is for subscription-based. The platform's popular "The Karate Kid" spinoff "Cobra Kai" is open to subscribers only, but Will Smith’s "The Jump" is ad-supported on the platform.
