YouTube v Facebook: Where should your video spend go?

The rivals are vying for market share in video with new ad services, but brands need to understand what is on offer.

This year could mark a tipping point in the rapid growth of online video. In a recent report, media group ZenithOptimedia predicts that the number of people globally who regularly watch traditional ‘linear’ TV as it is broadcast will peak this year and start to decline for the first time in 2016.

Online video will surge in this context, with time spent consuming video rising by 23.3% this year and 19.8% next year, the report predicts. Investment in online video advertising is also forecast to grow by 28.9% to $16.1bn (£10.5bn) worldwide in 2015, followed by 22.5% growth in 2016.

Predictions are one thing, but the question of where marketers should invest their budgets in this increasingly complex market is another matter. Last month, during the IAB Digital Upfronts series, some of the world’s biggest video platforms gathered to make their pitch for why they should be brands’ go-to place for advertising.

Although programmatic buying has helped to create cost efficiencies through automated ad placements, marketers should have a firm grasp of how the biggest video sites are changing, the measures to assess performance and the new features and ad formats that will help their brands to stand out.

Facebook challenging YouTube

YouTube remains the world’s largest online video site, but its supremacy is under threat from numerous other sites, social networks and publishers that are targeting a bigger share of the online video market.

Top of the list is Facebook, which receives two-thirds the number of video views of YouTube – a predicted two trillion in 2015 compared to the latter’s three trillion, according to research by Ampere Analysis. Both sites have comparable user bases of around 1.4 billion and 1.3 billion people, respectively.

With 10 years of specialising solely in video, YouTube has no shortage of brand content and advertising campaigns behind it demonstrating return on marketing investment. It has seen break-out hits such as Old Spice’s ‘The man your man could smell like’, which the brand claimed immediately doubled its sales in 2010, and BlendTec’s long-running ‘Will it blend?’ video series, which increased sales by 700% between 2006 and 2009.

Facebook’s focus on video marketing formats is more recent, but brands such as KLM and Samsung have published case studies on the Facebook for Business website reporting strong return on investment from Facebook videos, albeit bound up with responses from other ad formats on the social network.

Ampere Analysis’s research shows that views are growing at a significantly faster rate on Facebook, up by 309% between Q3 2014 and Q1 2015, versus growth of 7.7% on YouTube. Facebook is building on this momentum by launching new features, many of which mimic YouTube’s functionality.

This includes tests of a new ‘suggested videos’ feature aimed at making it easier for Facebook users to discover multiple related videos in a row after tapping on a video from their news feed. Last month, Facebook also announced that it is running tests of a dedicated channel where users can save videos that appear in their news feed for viewing at any time.

YouTube SlowMo Guys
YouTube has invested in advertising its own brand channels, including popular stars The Slow Mo Guys in campaigns

Graham Mudd, Facebook’s director of ad product marketing, suggests that social networking has increasingly become the forum for people to share and view video content. The company believes this trend, combined with its wealth of user data, makes it an increasingly attractive proposition to video advertisers.

“While you may think of another platform when you consider watching video online, the reality is that the last place you discovered new video content was probably on Facebook,” he claims. “Unlike other platforms, where most video viewing is search-based, Facebook has truly become the discovery channel for content and for brands and products.”

So should Google, YouTube’s owner, be worried? The picture is far from clear given that YouTube is continuing to enjoy strong growth of its own. While Facebook’s video surge is the result of people sharing clips on the network, Google reports that the number of users who start at the YouTube homepage has increased by more than three times this year. Time spent on the platform continues to rise year-on-year too.

In other words, YouTube has strengthened its position as a destination site for video and for people who want to enjoy deeper levels of engagement. Indeed, the site is seeking to cement this position with the launch last week of a new paid-for, ad-free premium service called YouTube Red.

YouTube also boasts a much more developed video advertising offer. To date, Facebook has focused on offering sponsored posts and has run tests of post-roll ads that play at the end of video content. The social network is expected to shift to pre-roll ads soon – the format favoured by YouTube – but it has also come in for criticism from industry figures such as WPP boss Sir Martin Sorrell for categorising a billable view of an ad at just three seconds.

Sebastian Micozzi, head of marketing at Pepsi Max UK, points out that advertisers care more about outcomes than the platform on which they advertise (see Q&A, below). However, as YouTube and Facebook compete for viewers – and increasingly encroach on each other’s territory – deciding which platform best achieves those aims will prove trickier than ever.

“Pepsi Max performs well across all social platforms, but we know that each platform plays a specific and distinct role within people’s lives, and needs to be treated accordingly,” he says. “The key for us is to understand where each of the strengths of the channel lie – mass scale, video seeding, immediacy, fame and so on.”

Primetime inventory

Rising competition from Facebook is one of the reasons that YouTube has invested heavily in advertising its own brand and channels over the past 18 months. This includes promoting popular YouTube stars such as Zoella and The Slow Mo Guys in campaigns running across TV, outdoor, press and online.

These efforts appear to be paying off. This year, viewing hours on YouTube have risen by 60% year-on-year in the UK. Thanks in part to the channel’s efforts to offer more targeted ad solutions, spend across the site’s top 100 advertisers in the UK is also up by an average of 60% in 2015.

At the beginning of the year, YouTube launched Google Preferred in the UK: a service that allows advertisers to reserve inventory on the top 5% of YouTube channels, measured according to their popularity and levels of viewer engagement. Google reports that 30% of the parent brands that have bought Google Preferred ads in the UK so far had not previously advertised on YouTube.

The long-term success of this strategy will depend on YouTube’s ability to continue attracting and promoting the best performing talent and video content. David Black, managing director, branding at Google UK, claims that established TV programmes and stars are increasingly tailoring their output to YouTube to ensure that it reaches the widest possible audience.

Pepsi Max’s partnership with Uber for ‘Back to the Future Day’ last month was used for online video advertising

He says that shows such as The X Factor in the UK and The Late Late Show with James Corden in the US are creating shorter segments specifically for the site in order to drive engagement with a younger audience. Such content, combined with YouTube’s expansive roster of vloggers, is the site’s most valuable advertiser inventory.

“The scale of the audience means that YouTube is now mainstream,” says Black. “YouTube is central to the strategies of big established broadcasters and whether they share highlights of their shows, back catalogues or made-for-web exclusives, broadcasters are following their audience to YouTube.”

Reach and engagement

With Facebook becoming a bigger player in online video, YouTube is also under pressure to offer more relevant, data-rich services to advertisers. Facebook has the advantage of holding more detailed personal data on its users, but YouTube is upping its game in this respect through its new Extra Reach Tool.

The service, launched this summer in partnership with market research group Kantar, involves using a panel of 3,000 households to advise advertisers on how to split their media budget between TV and YouTube based on aggregated viewing habits. Unsurprisingly, its suggestion is to spend more on YouTube.

From an analysis of 1,100 TV campaigns, Google’s average recommendation for brands targeting people aged 16 to 34 was to place 24% of their media spend on YouTube to achieve maximum reach. “I know that’s a big number, but you have to consider viewing patterns and how young audiences are shifting,” says Pete Cory, agency sales director at Google UK.

Reflecting its mounting challenge to YouTube, Facebook has launched a range of similar services. Last month, for example, Facebook unveiled its own version of target rating point buying to allow TV advertisers to buy video ads on Facebook using familiar TV metrics. The service will also soon arrive on Facebook’s photo-sharing social network Instagram, which launched its own ad business in the UK last year.

“We’re seeing that Facebook can add significant incremental reach to even very large TV campaigns,” says Facebook’s Mudd. “Early measurement results also demonstrate that adding Facebook to TV campaigns can significantly increase brand metrics.”

Given its current tests of a ‘buy’ button on sponsored posts, it is also likely that Facebook will move towards shoppable videos soon to allow users to click through to buy. This feature is at present offered to advertisers on YouTube that hold a Google Merchant Center account, which enables companies to upload their product inventory online.

However, Facebook is keen to stress the different user experience that it offers compared to YouTube, in particular its ability to serve targeted, sequential video ads based on user behaviour. This includes retargeting people who have engaged with a brand on the platform.

Mudd claims that EE’s ‘BufferFace’ campaign – which saw the telecommunications brand create four pieces of original content targeted at unique audience segments on Facebook – was a highly personalised campaign that reached 40 million people. “Brands that win take advantage of video as a canvas for brand building and rich sequential storytelling, creating content that resonates with segments of our audience,” he says.

Creating buzz

While YouTube and Facebook battle it out for supremacy, some of the world’s biggest online publishers are also honing their video offer in a bid to attract advertisers. Last month, BuzzFeed opened up its branded video content division to UK advertisers, with coffee chain Costa the first to run a campaign.

BuzzFeed says that it is focused on creating valuable and entertaining branded videos that people will want to watch and share in a similar fashion to the native posts written for its website. The Costa video, entitled ‘Little things that make people in Britain happy’, features a series of people sitting at a table, drinking from Costa takeaway cups and discussing what makes Brits smile.

Costa marketing director Caroline Harris says the brand aims to achieve at least one million views for the video, both through paid placements and organic sharing across platforms. “We are always finding new ways of communicating to our customers, and we like to test and learn to see what works,” she says.

Twitter also caused a stir during its IAB Digital Upfronts presentation last month as it unveiled a series of new ad services. The social platform has considerably fewer users than Facebook or YouTube – around 320 million – but is keen to carve a niche for itself as the platform best suited to real-time video advertising.

Twitter’s new features include Moments, a news curation service launched in the US last month that gives users a comprehensive overview of the day’s biggest stories by pulling together comments, images and videos from across Twitter. The Moments function, which is due to launch in the UK soon, appears as an additional tab within Twitter and allows people to follow particular ‘moments’ without having to follow the accounts that are discussing them.

The first promoted moment, advertising the boxing movie Creed, was launched at the end of last month and Twitter hopes that other brands will want to create their own moments around real-time sports or news events.

This was a common theme for Twitter as it also revealed the advertising potential of Periscope, the live-streaming mobile video app that it acquired in March. Twitter reports that the app already has more than 10 million users and that due to the continuous, real-time nature of its service, over 40 years of content are watched on Periscope every day.

Brands such as Netflix, Orange and Marc Jacobs have advertised on the platform, often by using marketing assets from other channels in a live video context. For example, Orange used the actors from a TV advert that ran in France for a live action sequence on Periscope so that viewers could follow the next stage of the story in real time. Marc Jacobs, meanwhile, has used the channel to live-stream catwalk shows to fans before holding Twitter question-and answer sessions immediately afterwards.

Twitter is planning further innovations with Periscope, including an ‘on air’ button that can be embedded within a company’s website or social media feed, which would flash red when the brand is broadcasting live. It hopes that this more immediate approach to video advertising will appeal to brands swamped with the huge array of video formats offered by the bigger platforms.

“No one is saying that live broadcasting is a new thing,” notes Georgina Parnell, head of entertainment partnerships at Twitter UK. “What’s new is the ability of people to engage with and comment on the broadcast.”

What are your key priorities for creating online video advertising?

For Pepsi Max in the UK, a digital-first approach has been at the heart of the marketing strategy since 2013 when it sought to find new and innovative ways to better connect with its audience.

When we create online video content, we don’t think of it as advertising. We like to think of them as real stories that Pepsi Max has created in the real world. Films such as Loop-the-Loop, Bus Shelter, Drone Football and our recent Back to the Future partnership with Uber were authentic activations, [filming real people on the street] and set in real time.

Pepsi Max is famous for working with global music and sports people, but since 2013 we’ve also collaborated with people from all walks of life: stuntmen such as Damien Walters, magician Dynamo, artist Hattie Stewart among many others. This mash-up of disciplines has created some of the most entertaining and influential branded content in the UK.

Are there synergies between online video and other advertising media such as TV, or do you treat online video as a separate channel?

We’ve always known that all channels and platforms need to work together, from traditional broadcast through to point of sale. Today, online video has tremendous possibilities. We have taken online content and experimented with it on broadcast TV, we have made bespoke content stories together with key customers, and we are now looking at how to leverage our UEFA Champions League partnership in the video content space too.

Given the likelihood that most people will skip online video ads if given the chance, how do you seek to hold their attention?

PepsiCo’s global president said at a recent conference that pre-roll video ads get in the way of the content that people want to watch. I think he is right. In a world where people have the power to skip, the only way to hold their attention is by producing content they want to watch. We are proud of the fact that, at the end of 2014, Pepsi Max’s YouTube channel was the most watched FMCG channel in the UK, achieving more than 50 million UK views of branded content.

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