YouTube ad revenue surge: Industry reaction from Carat, Ebuzzing, Gekko, iProspect, MEC, Rockabox, The BIO Agency, TubeMogul

A report from eMarketer has estimated YouTube's 2013 ad revenue will shoot up by 51.4 per cent to $5.6bn, signalling the massive appeal of online video content for advertisers and marketers. The Drum asked some industry figures for their views on the boom and what it means for brands and agencies alike.

Abbey Torrance, digital executive, Carat

Even since the beginning of 2013, the opportunities for advertisers have changed immensely as we are able to really see the ROI through digital channels such as YouTube. YouTube is key for kids brands, as children no longer sit in front of the TV all weekend, they can consume content wherever they are. The number of kids who access the internet at school, on their parent’s smartphones and tablets is vast and YouTube is one of the top sites for this audience.There are opportunities for brands to connect with their audiences 24/7 but some advertisers are still hesitant to see the benefits of digital media in comparison to the more traditional mediums.

Rebecca Mahony, CMO Ebuzzing

Without reservation 2013 has been a great year for online video advertising. YouTube’s spend figures make for incredibly positive reading and reflect on the strength of the industry as a whole. The IAB charted nearly 100 per cent growth in UK adspend in H1 this year and eMarketer’s latest report suggests European video adspend will hit €1.2bn before the year is out. There seems to be no reason for the upward trend to slow in 2014. Tablets are predicted to outsell PCs which will boost mobile video viewers significantly, and the introduction of workable emotion sensing technology means brands will be able to optimise their campaigns in a way that has never been seen before. There is likely to be fewer repurposed TV ads used in online video formats and more bespoke videos created which can fully take advantage of the online video opportunity. All these developments will help to boost the industry as we move into 2014, it continues to grow.

Daniel Todaro, MD at Gekko

Increased mobile activity along with the explosion of Smart TVs with YouTube connectivity has afforded YouTube incredible opportunities to create a valid revenue stream via advertising. Every LCD/LED on the market today offers connectivity, and if they don’t, just take a look at the integration of YouTube on Apple devices right through to Apple TV. Streaming is now also the norm, with adults and young people alike viewing video content they’ve searched for or have been sent to view. Although advertising opportunities for brands on YouTube are plentiful, caution is certainly required. Banners are accepted and are either ignored or absorbed subconsciously. Furthermore, if users have to view an advert before viewing a brand’s video content, this becomes dangerous territory. Power to you, YouTube.

Thomas Clark, head of play, iProspect

Online video continues to see large amounts of media spend being diverted from other channels. As spend increases, so does interest and opportunity. This, in turn, leads to innovation but also a certain amount of confusion. Over the last three years, we have seen many different ways to host and distribute video along with other technologies that can test creative, analyse data, or augment user experience. Like any new industry, or indeed start-up, you often see money being thrown around to test these innovations and see what the results are. Eventually, you start to understand what all the data you’re looking at means, enabling you to refine your offering and deliver real results. In online video, we are starting to enter the refinement stage. Until recently, brands have been investing lots of money to deliver views and shares, as with Facebook 'Likes' two years ago but without understanding the real return on investment. What we are starting to see now and will continue to see throughout 2014 is a shift from repurposed TV advertising to clear and separate online video strategies and audience development.

Jide Sobo, head of mobile, MEC

It's no surprise that YouTube’s ad revenues are through the roof off the back of increased mobile activity. After all, consumer behaviour has become all about constant connectivity. They reach for whichever device is closest to hand, and as mobile network speeds increase, and public Wi-Fi becomes ever more prevalent, consumers are increasingly connected. This constant connectivity means that media consumption grows exponentially as people use their devices to kill time, save time and for viewing primetime content. YouTube fulfils all of these needs at once.We're seeing a pronounced shift of ad revenues to mobile platforms. In fact, Facebook now delivers four per cent of ad revenues on mobile, up from zero 18 months earlier. Also, as the latest generation has always been connected, they just don't see TV in the same light as other generations. They are used to time shifting and increasingly place shifting their video consumption away from linear TV broadcasting. This platform becomes more about appointment to view programming, such as The X Factor, while other means – varying devices, streaming, downloads and box sets – become the de facto way of watching all other content.

James Booth, group CEO & co-founder, Rockabox

I remember having a catch-up with Bruce Daisley a few years back, when he was at YouTube. He told me of a new approach to advertising that YouTube was about to deploy – skippable pre-roll video ads. I have to confess, at the time I was quite surprised to hear this type of approach coming from a business like YouTube, but it was the first truly interesting response to the challenge of pre-roll advertising, within a pre-roll deployment that I’d heard of. It was simple and clever: for a user, this concept was great – ads could be skipped; for the advertiser, the advert was free if it was skipped within a given timeframe.TrueView is that system today and it has become much more than just a pre-roll video advertising solution. For many, TrueView is a must-have approach for content distribution. In this capacity it can deliver well but as with many solutions that offer retargeting capabilities, the clever part can be too clever – overkill damages brands. I say this because I’ve been stalked by a single video promotion on YouTube; it killed the advertiser’s brand for me.Established content distribution with its race-to-the-floor, cost-per-view model, is in a right muddle – poor quality sites, robot clicks, etc. With so much malpractice out there, I’m not surprised YouTube is raking it in.

Peter Veash, CEO of The BIO Agency

I am by no means surprised by these bullish revenue figures. YouTube is where young people are getting their entertainment now, through their smartphones and PCs and they’re switching between the two devices. Young people are now more interested in sharing content amongst friends than being a static viewer. YouTube is the most social of Google’s channels and if a brand needs to target niche markets, it can work well to drive targeted traffic to their site. Mobile is ever propagating these changes where ad spend is set to grow no end next year, while we may well see TV advertising take a dive.

Nick Reid, managing director TubeMogul

YouTube’s rise in ad revenue this year is a boon for the video advertising industry and tells a bigger story – video is being taken seriously as medium in its own right, existing separately to TV rather than an add-on. YouTube is a key component of almost every campaign going through programmatic video advertising platforms like ours. As a medium, it offers tremendous opportunities for reaching young consumers & engaging with them in a way that other media owners can’t. The chance to be a “YouTube Celebrity” in your own right intuitively taps into its users’ ethos and reason for using the web. As a result, YouTube has become a mainstay for brand marketers and a focal point for video advertising today. The revenue Google are generating from the platform can only expand more now that YouTube is allowing Nielsen’s online campaign ratings to help measure audiences on the site in a more targeted manner.

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