YouTube Premium, which offers users an ad-free YouTube experience, has recently started to serve in our country. Although it has not yet reached a considerable user base, advertisers in Turkey are concerned that YouTube Premium will affect the volume of YouTube ads.
Because ads can’t be viewed by Premium members, they can reduce ad views and access, as well as lower conversion rates. Frankly, the advertisers’ concerns are not unwarranted at all. However, before addressing these concerns, it is worth examining YouTube’s motivation for the Premium Service.
YouTube has long made a serious effort to keep advertisers on its platform. Scandals caused by well-known content producers such as PewDiePie, whose name is not ordained with racism, and Logan Paul, who disregards community rules with body video, are objectionable to advertising due to lack of moderation and control on the platform. large advertisers have long lost confidence in YouTube as it appears in content.
While advertisers such as Epic Games, Nestle and Disney have withdrawn from YouTube due to the platform’s outlaws, YouTube has stepped up its activities towards YouTube Premium, which it has positioned as an alternative source of revenue.
YouTube’s global advertising revenue is expected to reach .5 billion in 2019, according to a study published by e-marketer. While it seems pointless for YouTube to waive advertising revenue, YouTube Premium is focusing on a much more stable source of revenue than ads, with a simple rupee of .99.
With a total user base of 1,300,000,000, YouTube is the world’s second largest search engine and the second most traffic-filled website after Google. Assuming that 60 percent of the user base is from countries where YouTube Premium is available, YouTube reaches an audience of 780,000,000. If only 10 percent of this audience prefers YouTube Premium, the company reaches 78,000,000 users through this service.
Calculated at .99, YouTube Premium brings the company 5 million a month. YouTube, which has the potential to earn .2 billion annually, prefers Premium subscribers over advertisers.
As YouTube premium subscribers increase, the number of ads is expected to decline in access and impressions. As it stands, companies may need to reconsider their marketing budgets as conversions to YouTube ads decline. Masthead, Pre-Roll and Mid-Roll ads, which are preferred in wide-ranging campaigns, may gradually begin to perform lower than previously expected.
At this point, brands may be focusing on collaborating with Content Producers on YouTube. Because Premium subscribers will continue to access videos from their favorite content producers, even though they have been taken from ad views.
When it comes to an ad-free YouTube experience, one of the first things that comes to mind is how this can be reflected in content producers’ revenues. Manufacturers, especially those who are unable to show ads through their content to YouTube’s not-minded audience, may experience a decrease in advertising revenue. Nevertheless, it is worth noting that YouTube shares its revenue from Premium subscribers with content producers.
YouTube distributes subscription revenue to content producers by calculating content producers’ ratings over the premium subscriber base’s viewing time. The company, which recently released new features to help content producers generate more revenue, is slowly starting to disable advertisers by opening its Premium service to new countries.
In the meantime, Netflix, one of YouTube’s biggest competitors, has made 82 percent of its media investments in 2018 through YouTube. YouTube Premium, which offers users original content just like Netflix, will share a share in its competitor’s and also the biggest advertiser’s impressions in the country as it continues to spread.