- YouTube is launching new ads and buying tools aimed at direct-response advertisers.
- It's these small and midsize brands that fuel its sibling Google's massive search-ad business. So capturing more demand here could provide a big boost to YouTube.
- YouTube says it has 1.9 billion logged-in users and that the new ads will make it easier for them to share information with brands: "We think this is a highly interactive opportunity."
YouTube wants its ads business to look a little more like its Alphabet sibling Google's.
The web-video juggernaut has spent the past several years trying to sway big advertisers to move their budgets to YouTube from TV. And while that mission continues, YouTube wants to turn on another, potentially more lucrative revenue spigot: direct-response ads.
In other words, YouTube wants more of those millions of small and midsize brands that fuel Google's massive ad business to run YouTube ads.
So the company is rolling out a new ad product designed for these brands, as well as a buying mechanism aimed at making it easier for direct-to-consumer advertisers to purchase ads on YouTube much like they do Google search ads.
Specifically, on Tuesday Google is set to unveil:
- "TrueView for action" form ads. These ads are designed to enable people watching videos on YouTube to easily respond to an ad — like enter an email address or sign up for more information — without having to leave YouTube.
- Maximize Conversions bidding for TrueView for action. This new buying option lets advertisers easily and automatically funnel money into ads that are generating a response — just like they do with search ads that people are clicking on a lot.
Part of Google's motivation for these moves is to change the perception of YouTube among advertisers.
"Historically, when people came and worked with Google, they were looking for lower funnel conversions, and they would come to YouTube to inspire new demand," Debbie Weinstein, a managing director for YouTube video global solutions, told Business Insider. "We want to bring those worlds together."
And of course, YouTube would love to bring over some of Google's monster ad demand. Alphabet doesn't break down YouTube's revenue, but an analyst recently estimated the business could generate $15 billion in ad revenue this year.
Meanwhile, Google pulled in over $31 billion during the first quarter of this year, a surge of 26% over the same period last year. Most of that revenue comes from search advertising purchased via Google's automated auction.
So if YouTube could better tap into that market, it could be a boon to revenue. Weinstein said that to date, many of YouTube's ad-buying options were focused on helping marketers drive up views of their ads — but many direct-to-consumer advertisers care mostly about driving leads or sales.
"It just was not the most efficient way for them to buy," she said.
Besides making it easier to buy ads on the back end, the new YouTube ad products could help brands generate more customer data. YouTube has 1.9 billion logged-in users, who will be able to have their email addresses automatically shared with advertisers if they want using the new "action form" ads, Weinstein said.
Of course, not every small-to-midsize advertiser is equipped to run video ads. Thus, YouTube recently started hosting training sessions around the country to help more small businesses clear this hurdle. And the company is working on machine-learning tools to make it easy to pump out interactive video ads, Weinstein said.
Weinstein believes people are ready to respond to video ads, even if they're in "lean back" video-watching mode.
"The mobile viewing experience on YouTube, people are highly engaged — their phones are seven inches away from their faces," she said, adding that for the right advertisers, "we think this is a highly interactive opportunity."
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