What's Next For YouTube As Google Puts Ad Chief Susan Wojcicki In Charge?

Feb 5 2014, 1:52pm CST | by

What's Next For YouTube As Google Puts Ad Chief Susan Wojcicki In Charge?

Updated with confirmation from Google:

Google’s YouTube video service has a new boss in a move that’s likely to sharpen the search giant’s focus on capturing more advertising from television.

Susan Wojcicki, Google’s senior vice president of advertising and commerce and one of its earliest employees, will take over as head of YouTube, Google confirmed today. The move was originally reported by The Information Tuesday night and Re/code this morning. Wojcicki succeeds Salar Kamangar, an even earlier Google employee who has headed YouTube since 2010 and is expected to move to another job at Google, possibly at its venture capital arm.

In a statement, Google CEO Larry Page provided few details. “Like Salar, Susan has a healthy disregard for the impossible and is excited about improving YouTube in ways that people will love,” he said in the statement.

The move isn’t entirely a surprise, since there has been continual uncertainty among marketers and ad agencies for at least the past year about who controls the advertising on YouTube. Although the move likely signals an even greater focus on YouTube as a key player in Google’s greater advertising ambitions, it’s not yet apparent that it will mean big changes at the unit.

After all, despite a constant grumbling by YouTube video producers about ad prices and YouTube’s large cut of same, the video site’s revenues have by all accounts been growing by leaps and bounds. Revenues jumped 51% to $5.6 billion last year, according to eMarketer.

And while YouTube’s ad prices have plateaued or declined thanks to the seemingly infinite number of videos uploaded daily, they’re still an order of magnitude or two higher than standard display ads. Even more important, they attract advertisers more interested in promoting their brands for purchase consideration down the road, in contrast to search ads that prompt an immediate click and sale. The former, image-oriented ads still dominate in traditional media, such as slick magazines and especially television, which at $200 billion worldwide dwarfs online advertising.

Still, Google clearly has even bigger hopes for YouTube. For the past couple of years, YouTube has been courting more professional, Hollywood-style content from the likes of Amy Poehler and Madonna. But that push for more TV-like channels hasn’t taken off as much as Google had hoped, despite the opening of a glitzy 41,000-square-foot production studio in Los Angeles and other locations.

So more recently, in recognition that the most popular videos and channels on the site are mostly homegrown talent, YouTube has tried to persuade big brand marketers from GE to Unilever to create branded channels and videos that fit the less scripted, more free-form nature of the most popular YouTube videos. This year, Google will open a new YouTube production facility in New York aimed at pushing that initiative ahead.

The move potentially makes Google’s management situation clearer. Wojcicki had shared the same title as Sridhar Ramaswamy, who early last year joined Page’s inner circle of executives, known as the L Team. Ramaswamy has been more focused on the commerce side, with Wojcicki running both search and display ad products.

While some observers believe YouTube needs to attract flashier ads of the sort that work on television, others believe the key will be crafting more ad formats that fit the medium better than 30-second spots. Some of the most popular videos on YouTube are in fact ads, such as Unilever’s Dove Real Beauty Sketches and Red Bull’s Stratos space-jumping sponsorship, that run for several minutes. The appointment of Wojcicki, a longtime product executive in whom insiders say Page has great confidence–she rented out part of her house to Page and cofounder Sergey Brin early on when Google moved out of Stanford–could indicate a greater emphasis on development of new ad formats and methods of targeting and measuring them.

Under Wojcicki’s watch, new ad formats and methods of measuring their impact have migrated from YouTube to the rest of Google’s non-search advertising system, in particular its display ad network that syndicates ads to about 2 million other websites. Developed under Wojcicki and longtime display VP Neal Mohan, so-called engagement ads, which feature videos, games, and even app-like experiences inside display-ad formats, play only when they’re hovered over at least two seconds. They command about double the usual display-ad rates.

The philosophy behind YouTube’s popular TrueView ads that run before videos play, which users can skip and advertisers pay for only when they’re viewed, has infused ads on the Google Display Network as well. Google recently offered the option for advertisers to pay only for ads that have actually been viewed.

If Wojcicki can make YouTube ads more lucrative, that could help quell unrest among YouTube creators complaining that they aren’t getting enough revenue out of their arrangements. That in turn could help discourage them from seeking out alternative means of distribution.

But those are big ifs. And it’s still not clear whether better ad formats, if indeed they can be created, are the key issue vs. others. YouTube’s sizable 45% cut of revenues remains a source of dissatisfaction. More worrisome, it’s unclear whether YouTube can command higher ad prices in the face of so much ad inventory, especially as more people use it on mobile devices with small screens.

The fate of two key YouTube executives–content head Robert Kyncl and product chief Shishir Mehrotra–remains uncertain. Mehrotra was responsible for YouTube’s TrueView ads.

Wojcicki provided some hints on what might come next in a recent interview for my Forbes story on Google’s push into brand advertising. Some samples:

[Online] is a different medium. The Red Bull campaign, the Samsung live streaming, these aren’t things that would have happened on TV. So just like it didn’t work to just take a radio ad and put it on TV, they had to change the creatives. It’s the same online. The creatives have to be dynamic and interactive and timely.

Things are starting to change. Like Burberry Kisses, or theSamsung ad or the Dove ad, or the Red Bull ad. These are really dynamic, and they’re really timely. They’re in the moment, and people are able to take advantage of that.

We’re not just trying to enable YouTube to reach the next generation, we’re trying to enable advertising across the entire Web to reach that next generation. A large brand or advertiser can’t reach all these individual sites, so how can we aggregate it for them so they can reach the right audiences right at the time they’re interested.

Source: Forbes Business

 
 

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