YouTube attacks brands’ TV ad spend with claims it can offer better ROI

YouTube is challenging how much marketers spend on TV, saying that in 80% of cases brands “can confidently double their spend on YouTube” and still get better ROI, but is YouTube really competition for TV or should it be focused on how it complements?

The claims come after YouTube conducted a meta-analysis of 56 case studies from brands in the CPG, automotive, classifieds and local, media and entertainment, retail and technology businesses. The brands ran campaigns across eight countries in Europe between 2013 and 2016, with 20% of them running in the UK.

YouTube concluded that at current spend levels, it delivers higher ROI than TV in 77% of cases.

Speaking to Marketing Week, YouTube’s director for media strategy David Benson said: “Brands are investing too much in TV. What we are saying is that at current spend levels YouTube can offer better ROI than TV. In 80% of cases brands can confidently double their spend on YouTube without risking coming up against the ROI of TV.

“It is time YouTube was a much more considered part of the advertising budget.”

David Benson, director for media strategy, YouTube

The studies were all carried out by third-party research companies, including GfK, BrandScience and Kantar Worldpanel. Benson said YouTube also deliberately picked brands that are respected marketers such as Mars, Diageo and Danone.

Does YouTube really have a better ROI than TV?

This is not the first time YouTube has tried to convince marketers to shift their budgets away from TV to YouTube. Last year, it appealed to advertisers to shift 24% of their budgets over if they wanted to reach young audiences.

It is also not surprising that YouTube wants a bigger piece of the TV ad spend pie. According to the Internet Advertising Bureau, UK marketers spent £711m on video ads in 2015. Thinkbox, puts the figure spent on TV ads at close to £5.3bn.

Yet pitting itself against TV seems like an odd move for YouTube. There are other, far less effective, media that it would make more sense for brands to pull money out of than TV.

Benson, however, countered: “We wanted to compare like with like, so a video campaign with a video on TV. TV is better understood so we wanted to help brands understand YouTube ROI so they can optimise their media mix. It is then up them where and how they apportion and reapportion budgets. We are advocating that brands optimise their mix depending on their objectives – whether reach, frequency.”

Read more: TV advertising more effective now than in 2011

Unsurprisingly, YouTube’s claims have been met with some scepticism by the TV ad industry. Matt Hill, research and planning director at Thinkbox, suggests there are “no surprises in the study”.

“Good ROI on relatively low spend shouldn’t surprise anyone. But in their haste to benchmark themselves against the performance of TV, Google must knowingly miss the point: the true value of TV advertising is not just its ROI but that it achieves the best ROI at the highest levels of investment. That is why TV builds brands better than anything else and creates the most profit. Don’t confuse high ROI with high volumes of profit,” he explains.

YouTube: competition or complementary

Hill also says he is in agreement with Google that spend on online video could increase, but questions why this should be funded by taking money out of TV rather than less effective ad budgets such as online display.

Read more: Instagram – competing with TV or complementing it?

In reality, most marketers see YouTube as a complement to TV, rather than competition. YouTube quotes Marc Zander, UK media director for Mars Chocolate, as saying he believes YouTube “clearly has a role to play in our ongoing media plans in addition to TV”, while Danone’s media planner Marie Mathieu says video comms should be optimised to “complement our TV communications”.

That YouTube is beginning to offer brands case studies on ROI is an encouraging move. But as Pete Markey, CMO at the Post Office told Marketing Week last year, “YouTube seems to work best as a companion channel”. Perhaps it should, as Twitter does, focus how it complements TV rather than trying to battle for its marketing spend.