What impact will Google’s new ad formats have on pricing and perception?
The tech company is ramping up its advertising proposition with unskippable TV ads and new ad slots on Gmail.
New ad formats are being rolled out across YouTube and Gmail / Cardmapr
Google, giant as it is, is facing the same advertising issues as the other supply-side providers. A slowdown in tech spend and global economic issues impacting overall ad spend has been evident in its own figures and those of its competition. It is being forced to adapt to privacy changes – though it is ahead of the curve with regard to the demise of the third-party cookie.
And while the headwinds may be less severe than expected, they are forcing advertising giants to seek new or optimized sources of revenue.
While Meta is experimenting with monetizing users directly, the opportunity for Google seemingly lies in an extension of its existing advertising formats across both Gmail and YouTube, increasing the ad load and pushing unskippable ads.
At the Upfronts on Wednesday night, YouTube announced that it would be deploying unskippable ads across connected TVs. The feature will be available via YouTube Select and will impact 70% of impressions on CTV. Sean Downey, president of sales at Google, said it would deliver “richer storytelling” in its most-viewed content.
Additionally, Google has been experimenting with increased ad load in Gmail feed. Promotional email marketing - which was once relegated to the Promotional and Social tabs - is reported to be appearing in users’ main email inboxes.
When asked about the reported insertion of ads into the main email inbox, a Google spokesperson said: "Ads are not being tested in the Gmail Primary tab. We rolled out instream ads in the Promotions tab on mobile last year, and recently started rolling these out on desktop. The Promotions tab is separate from the Primary tab".
Pricing and perception
For marketers, the question is to what extent these changes will impact both pricing and perception of ads across Google’s platforms. Cadi Jones, the managing director for EMEA at Pixability, says: “Google’s move to serve one 30-second ad instead of two 15-second ads will actually, in itself, reduce ad load as users will see fewer (longer) ads than they had been previously per session.
“It’s hard to predict how this will impact pricing. While my gut instinct may be that this would increase prices since advertisers will be competing for one 30-second spot versus two 15-second spots, in general, there are so many constantly shifting factors that affect pricing that it may not have such a direct effect.”
Jacob Bennett, senior paid media account manager at digital agency Roast, believes that the overall increase in ad slots does not necessarily mean that pricing per slot will come down. However, he notes that this too will work in Google’s favor.
“Fundamentally the building blocks of economics will out, when supply increases, demand will likely follow in the inverse. We may see a spike initially as the new shiny toys attract advertisers to test; however, an increase in available ad units without a great increase in advertisers will likely take prices down gradually. Google, however, will still be winning from the increased volume of ad units being sold.”
According to early reports of the appearance of ads in Gmail, the initial reaction to the test was broadly negative. This tracks research into the public perception of advertising in the UK, which found that the bombardment of advertising was cited as one of the primary reasons for public mistrust in digital advertising.
The unskippable ads across YouTube on TV, however, do not necessarily have that same issue. For one thing, customers are largely already habituated to unskippable ads on CTV, so YouTube’s lack of unskippable 30-second slots was already something of an anomaly on the platform. In addition, that has the added side effect of providing parity in terms of measurements.
Jones explains: “Unskippable ads on TV screens are the norm, so I don't see this having an impact on public perception of digital advertising. What this will do is give us even more apples-to-apples ways to measure YouTube CTV views compared with views on other CTV platforms because we’ll have more unskippable views to compare to each other.”
Driven by changes to the digital advertising ecosystem more generally, Google is experimenting with new formats and ad slots in new formats and frequencies. While the success of each experiment is yet to be determined, it is proof that even the largest advertising companies are not totally immune to economic forces and external changes.