A couple of weeks ago, I was at YouTube’s Lean-In event in Los Angeles. At day’s end, Google’s Chairman Eric Schmidt gave a talk about his perspective on YouTube’s past and the future of online video. During the Q&A, I asked him a softball question.
But I really wanted to know more about the following: With Adsense, Google essentially introduced a revolutionary ad unit that added to the user experience by totally aligned marketers. With YouTube, the jury’s out on whether online video will bring about a revolutionary ad unit – or at most, we will see an evolution in the 30-second ad unit. Now, whether or not YouTube’s skippable TruView ad unit is evolutionary or revolutionary may be semantics for now, but YouTube’s introduction of the Chromecast product adds an interesting dimension to Google’s quest for media domination.
Chromecast is a digital media player (a dongle, in case you need to know) that plays audio/video content on a high-definition television by streaming it via WiFi from a user’s existing smartphone, tablet, or laptop.
While cord-cutters are one concern of television media companies, cord-“nevers” are a bigger, more alarming concern: an entire generation of consumers who simply never sign up for cable. To them, YouTube is video content. As these consumers get older and have higher discretionary income, they may not be conditioned to pay for cable (though I suspect, many will) but they will be inclined to buy big screen TVs to enjoy their programming. Through the introduction of Chromecast, Google seems to have learned some lessons from its Android mobile strategy: Yes, it’s perfectly fine to partner with hardware makers as they launch connected TVs, but that may be a slow rollout, so it may be equally effective to give consumers an affordable and relatively simple way to turn their televisions into an extension of YouTube (and thus Google’s) online domination. Google’s introductory price point was $35, which is very reasonable. (Disclosure: I, along with all other attendees at Tune In, were offered free Chromecasts.)
So if you connect a) YouTube’s massive collection of content and userbase; with b) the TruView ad unit, made possible in part due to Google’s AdSense “pay only if…” DNA, and YouTube’s massive supply of ad inventory; and c) Chromecast’s accelerating getting YouTube onto big screen televisions; and d) the fact that the 12-34 demo may already be watching more online video than television anyway — then YouTube may actually have turned a somewhat inconspicuous evolution like skippable ads online on YouTube into a rather disruptive revolution in advertising. Suddenly, consumers can skip ads on TV, and in turn marketers will only pay for ads if consumers watch them. Of course, the key here is that YouTube’s content needs to start to look and feel like television. That’s not a given, but it’s not an impossible proposition, either.
It’s worth noting that YouTube’s $100 million experiment probably led its strategists to conclude that, at least to YouTube’s ever-increasingly desirable audience, the difference between television and Web video is moot. In fact, with TruView, YouTube is basically adopting a neutral approach to content, letting its algorithm determine what is quality with regards to whether or not an ad should be served before every impression. Like it or not, this is rather revolutionary.
If there’s one thing I’ve learned about having multiplatform distribution, it’s that mobile is growing fast, the “traditional Web” (accessing the Internet via your computer, basically) is where the action is, and over-the-top connected devices are promising, but ultimately a very small segment compared to the other two. As such, Chromecast is an accelerant that allows YouTube’s billion-plus users to make OTT a far bigger deal, fast. We already knew that as Google and Apple were duking it out for mobile supremacy, YouTube’s size in video would always give Google a foothold regardless of whether a consumer bought an iPhone or Android device.
But what the Chromecast does is amplify both Google’s mobile and video strategy, at a ridiculously low cost point to Mountain View and even lower price for consumers. That starts to sound pretty revolutionary to me.
(Disclosure: My company is a channel on YouTube.)