YouTube Ad Revenues, Creative Output May Grow During Coronavirus
As digital media buyers and strategists navigate the unknown in the coming months, one possible platform winner may be emerging: YouTube.
YouTube’s Recent CPM Trend
Two CEOs of large YouTube properties have noted a perceptible drop in CPM costs in the past week, in one case up to 15%.
CPM cost stands for “cost per 1,000 ad impressions,” a standardized metric to assess media cost.)
There has been ongoing concern that a drop in CPMs would be the natural consequence of advertisers pulling back ad dollars until the situation is more under control and consumer confidence is restored.
However, there is speculation something positive is actually causing it: a drastic increase in user consumption, providing more ad revenue than there typically is.
With users at home, captive to their screens, YouTube provides an endless stream of entertainment and how-to videos that are now being searched for and watched more often.
This means more video watched, and more time on the platforms, and that equates to more opportunities for ads to be shown.
This balance of increased content demand could trigger an influx of ad supply.
There are other reasons YouTube may fare well during this time period, beyond the increase in users watching.
Unlike its large studio counterparts that have had to largely suspend production in order to enforce social distancing, YouTube creators can make their videos solo with a very simplistic setup.
Independent creators are able to more nimbly serve the current situation and adapt their content to capitalize on how search trends may change during this time on YouTube.
Their topics and production schedule can be more fluid, and they are able to be more responsive to user interest and demand.
This could especially be true for creators in the areas of kids’ entertainment, home fitness, and cooking – all areas that provide activities and ideas users can do at home.
This could also signal an opportunity for newer YouTube channels who have struggled to get a foothold until now.
With a larger group of watchers, heavyweights in a particular category may not be able to keep them as captive since they now will have more hours to expend watching, and will naturally seek out other creators.
Navigating Possibly Reduced Digital Ad Spend
Overriding caution is still pervasive, however, with brands noting the increase in user watching doesn’t necessarily mean businesses will be willing to part with the ad dollars to make the content.
There is also speculation around what it means for the ad dollars that normally go to sporting events, and how brands will choose to reallocate them if they do so at all with so many unknowns facing the economy in the coming months.
With an unknown timeline ahead, businesses must balance their offerings and stay top-of-mind with consumers with the need to be conservative to weather whatever future storms could arise.