Television advertising remains the most powerful branding vehicle as there is no better way to realize the reach of that medium. Digital advertising, while lacking the same reach does provide opportunity for specific targeting, granular measurement, ad unit customization and interactivity. The lean-back environment of the television viewer does not necessarily lend itself for an interactive ad experience, but the digital delivery of YouTube TV does allow for ads customized on the viewer’s audience characteristics or on their behavior.
The initial carriage agreements provide YouTube with ad sales rights for the inventory which otherwise would have been earmarked for local advertising by the MVPD. There is also an undisclosed revenue share between YouTube and the content owner for those YouTube-sold ads. There will likely be further coordination between these parties involving addressable ad targeting for the content owner and bartering of ad inventory.
Google's announcement of YouTube TV last week is one that will be seen as an inflection point for the world of media and advertising.
YouTube TV, originally code-named "Google Unplugged" is the latest “Virtual MVPD”, joining DirecTV Now, PlayStation Vue, Sling TV and offering a set of live TV channels through digital means (as opposed to traditional MVPDs who deliver television to the home through their own infrastructure like satellite, telecommunications lines and terrestrial cable) for a monthly fee.
While each of these players have their own unique features, they are generally providing the same set of offerings: a “skinny bundle” of TV networks, available for viewing on any internet connected device at a very competitive price point as compared to the larger bundle of many channels from your local cable provider. Basic feature set similarities aside, YouTube TV, by nature of its parent company, will create waves, not ripples across the sea of TV viewership, distribution, and advertising.