#RBCDisruptors: Narrowcasting to the Billions

The American filmmaker has 7.2 million subscribers on his YouTube channel, and his videos—most of which feature him as the narrator and star—have been viewed more than 1.6 billion times. Neistat is one of a new generation of digital celebrities that have found a home on YouTube, which launched in 2005 and now posts more than 1 billion users around the world. And his success, according to YouTube’s managing director of global brand solutions Debbie Weinstein, is a great example of the democratizing power of the platform. “It’s a platform for anyone who has a story to tell to come and tell it,” she said. “And you can find huge audiences on YouTube.” For much of its early years, YouTube’s slogan was “Broadcast Yourself.” The democratizing power of online video has transformed advertising, the entertainment business, and mobile communications—and could transform the way businesses interact with their customers.

A Changing Audience

Once a disruptor, YouTube—which is owned by Alphabet—has become a part of the mainstream media. It accounted for more than one-fifth of the mobile video watched in the US in 2016, and creators such as Lilly Singh and PewDiePie have become household names—especially among those under 21. YouTube has launched family-friendly versions of the site in some territories, using even stricter content controls than its work-safe default. Older generations are also spending time on YouTube and other mobile video sites—they now account for one-third of all viewing time for Americans aged 50 to 64, according to Nielsen. “What’s great about YouTube is that you can find whatever you’re into, there’s something for everyone there,” Weinstein told the crowd at an #RBCDisruptors event on May 31.

The Upside for Advertising

While networks like NBC, ABC and CBS like to talk about age- and gender-based demographics, YouTube is most interested in what its individual users actually watch. Two random users might be of wildly varying ages and backgrounds, but their love of acoustic Katy Perry covers makes them the perfect market to buy her latest single. The company uses machine learning to build sophisticated recommendations based on a user’s browsing habits—and uses that same data to serve customized ads. “What’s great about YouTube is that you can find whatever you’re into,” Weinstein said. “And with the signals you can capture in the digital world, you actually can find consumers at scale that are right for your business.”

Know Your Users

As the company and its audience have expanded, so too have its relationships with advertisers. Weinstein said the democracy of online video demands marketers be much more honest about who they are. “It means that anyone can actually help amplify your message or detract from the message that you’re trying to tell the marketplace,” she said. Weinstein said marketing firms need to know where their clients stand on social issues such as diversity hiring practices and environmental responsibility. Dealing with the potential backlash is worth it for advertisers, though. The NFL’s annual Super Bowl championship game generates headlines with ads that cost US$5 million for a 30-second spot, but Weinstein points out that YouTube reaches a Super Bowl-sized audience every day.

Controversial Content

The latest controversy for the platform surrounds advertising and extreme content such as hate speech. More than 205 companies, including five of the top 20 US advertisers, said they were suspending or reviewing their YouTube ad spending in February and March of this year after reports that ads were being served on inappropriate content. Weinstein said the company has reviewed and expanded its policies around extreme content, updated its AI-powered automatic monitoring, and instituted new controls for advertisers “We take this really seriously and we’ve made a huge investment in terms of engineering and human resources,” she said. “Technology as a solution for democracy’s messiness is a hard thing.”

The Copyright Conundrum

In the early years, Weinstein says the company was “almost killed” by the challenge of copyright and intellectual property. Its solution to people uploading videos produced by others, be it TV shows or music videos, is a complex piece of software called Content ID that automatically detects copyrighted works and either removes them or credits the proper creator. The company struck early deals with record companies, including Universal Music Group and Sony Music Entertainment’s VEVO partnership, to bring streaming music and official music videos to the platform. By some measures, it is now the largest streaming music service in the world. “What we sometimes find happening is publishers, originators of content, make more money from people who actually rip off their IP, from the Content ID claim that they’re able to make, than from the original upload themselves,” she said.

Innovation in Immersion

YouTube has been less successful striking deals for video content, as subscription-driven rivals such as Netflix and Hulu have spent millions on the rights to critically acclaimed cable and network shows such as Breaking Bad and original shows including House of Cards. “Many of these Golden Age of TV dramas are being created on Netflix or Amazon, which are actually behind a paywall,” Weinstein said. “If you’re an advertiser, and you want to surround that experience with your message and connect to those audiences, you can’t.” That’s one of many reasons YouTube’s online power—it is the second most-visited site on the web—doesn’t protect it from disruption of its own business model. The company is now imitating the approach of traditional networks by producing its own content—shows and creators that are meant to be more focused and advertiser-friendly than the anything-goes content of even its most on-brand stars. It’s also investing in 360-degree videos, live video and virtual reality in order to add a previously unseen level of immersion to online video, and broadcast much of the recent Coachella music festival with its latest surround technology. Weinstein said YouTube is tracking the way people watch online video, from desktops to mobile devices and now back to TV screens. The future will see a divergence in the kind of content YouTube tailors to each device, she said, and the company will work with marketers to tailor ads to anything from the biggest communal screens to the personal VR headsets. “Imagine being in the front row of the concert, but really being in it,” she said. “We haven’t seen a lot of marketing yet exploring what will be possible.”

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