skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Ovum view

Summary

YouTube has announced that, as of 2018, it will no longer serve 30-second unskippable ads on its platform. This is a smart move, as competition for video ad dollars and consumer engagement will intensify over the coming years, especially on mobile devices, and as players seek to monetize viewers in emerging markets.

Shorter video ads will increase mobile engagement and monetization potential, especially in emerging markets

YouTube's TV-style unskippable 30-second ads have drawn the collective ire of viewers since they were first introduced. Their departure will be unlamented by viewers. YouTube's decision to axe the format comes as it increasingly becomes a mobile-first service. The majority of views now occur on mobile devices, where such long-form ad formats are especially jarring. However, it also comes as socially geared competitors Twitter and Facebook are making video central to their strategy, and moving toward a more TV-like ad environment in an attempt to poach TV ad dollars.

However, Ovum believes that mobile and social media platforms are not a good fit for TV-style advertising, which can detract from the viewing experience. The increased levels of interactivity and direct consumer engagement on mobile apps and services means that new ad formats, tailored to both the core user's experience and their mobile devices (such as Snapchat's Sponsored Lenses and Geofilters), have the potential to drive much greater engagement and reach, and will more effectively circumvent ad-blocking behavior. Other innovations, such as integrating commerce into video ads – which YouTube has already done with its "Shoppable Ads" – offer further opportunities to increase consumer engagement and revenues.

YouTube will continue to push video ad formats to advertisers. However, the emphasis will be on shorter formats – such as the six-second unskippable "Bumper" ad, which YouTube introduced in 2016. This, coupled with longer – yet skippable – TrueView in-stream ad formats, should make the platform more appealing to viewers, particularly on mobile screens. These are only billable if a user clicks through on an in-ad element, or views the entire ad (or 30 seconds, whichever comes first), offering advertisers greater cost efficiencies and, theoretically, more valuable engagement.

The lower ad loads associated with such formats should also help YouTube to better monetize emerging markets, where barriers to video consumption and delivery, particularly over mobile networks, remain high. Ovum expects such markets to deliver the majority of YouTube's user growth over the next five years. Tailoring its ad strategy to better serve the emerging markets will likely offset the revenue lost from dropping its most reviled ad format.

Appendix

Further reading

Digital Content and Services: Video Internet Advertising Forecast, 2016–21, ME0002-000730 (December 2016)

"Why Twitter is wrong about the future of mobile video advertising," TE0021-000002 (February 2017)

Author

Matthew Bailey, Analyst, Digital Media

matthew.bailey@ovum.com

Recommended Articles

  • Service Provider Markets, Consumer & Entertainment Services,...

    MWC 2018 Highlights

    By Ronan De Renesse 27 Feb 2018

    Over 20 of our senior Ovum analysts and consultants attended this year’s Mobile World Congress in Barcelona at the end of February. In between meetings, briefings and presentations, our analyst team were blogging and tweeting about key developments, trends and rumors. Have a look through our daily MWC 2018 Highlights to find out what happened.

    Topics 5G AI IoT Cloud Payments SDN/NFV Smart home

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.

;

Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700


Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

Email us at ClientServices@ovum.com

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at pr@ovum.com

Contact marketing - 
marketingdepartment@ovum.com

Already an Ovum client? Login to the Knowledge Center now