It's been a year of upheaval at YouTube. In October, the site unveiled a long-awaited redesign meant to expand (and improve) its selection of videos in order to get users to spend more time watching them. Now, YouTube is shifting its focus to advertisers. Lucas Watson, who started as YouTube’s vp of sales and marketing six months ago, hopes that 2012 will be the year big brands start to look at the site as a premium advertising outlet. Adweek caught up with Watson to talk about how he intends to do that.
Adweek: How are you liking it at YouTube?
Watson: I’m relatively new at Google. I spent 17 years at Procter & Gamble. I was on the brand-building side there. So it’s an interesting contrast to now sell advertising to brand builders. But I took the job because I believed in what YouTube was trying to do to the advertising industry.
And what, exactly, is that?
The current advertising framework for video is based on reach and frequency—cost per impression. That’s the language the industry’s built on for television. But we’re trying to build [a different] concept that says, "Hey, you should only pay when a user actually watches a whole ad." And really, we should not charge on a cost-per-impression basis but a cost-per-view basis. That’s a mind-set shift.
What’s the difference?
Under the cost-per-impression system, an advertiser may pay $20 for 1,000 advertising impressions. And all that really guarantees is your advertisement will show up on a screen 1,000 times for $20. Whether a human being actually watches that ad or goes and gets a coffee, you have no idea. The system is built with the understanding that most people will never actually watch your ad. Imagine if we said, "We’re not going to charge you cost per impression; we’ll only charge you cost per view." That’s a mind-bending concept for many people. Because of the Internet, that becomes possible, whereas in linear TV, it’s not possible.
So, bigger picture, you’re trying to make sure that all the ads on YouTube are tailored?
If we both turn on ESPN, and we're in the same region, we’ll both get the same Nike commercial whether we’re [both] interested in it or not. YouTube has over 800 million unique users. We could deliver a different ad to every single one of them. Our big advertising play is TrueView, which tries to match people with ads to increase the likelihood someone will actually choose to watch the advertisement. It allows you to personalize every single ad, which means we have the potential to create an advertising system where each ad is far more relevant for the person watching it.
What are you hoping YouTube will look like when you’re done?
If we have 800 million people now, I’d hope to serve billions of people in the future. And I would hope to have millions of pieces of creative to choose from to find the right match between an ad and the person who wants to watch it. Then, every single ad is valuable for the user.
Is this part of the broader vision that comes with YouTube’s channel strategy?
Salar [Kamangar, YouTube CEO] hired [global head of content partnerships] Robert Kyncl to make us more competitive in the area of content. And he hired me to make YouTube a more relevant proposition for the ad and brand-building industry.
So now you’re expanding outreach to advertisers?
YouTube’s first five or six years of life were focused on a user experience that was wonderful, but many advertisers probably wouldn’t have said that YouTube was the first place they would go. I hope a year from now, advertisers will say, "YouTube is a place I could build my brand."
And you think the site is improving enough to accomplish that?
I think we have tangible, visible signs that YouTube is better than a year ago. The user experience has been completely redesigned.
There's still a lot of stuff on YouTube that brands probably wouldn't want to advertise against. How do you convince them to come on board when there's still unsavory content on the site?
We’ve developed innovations to address that. Much like the TV ratings system, we’ve also launched rated channels. So, we’ve partnered with comScore to provide ratings for our partners—how many views is Vevo getting, for example—and you can buy advertising against rated channels.
What, specifically, will you be doing in 2012?
You’ll start to see some integration between Google Plus and YouTube. The focus is going to be on helping clients build brands by building communication plans that leverage the Google products so that they work together.
Take a popular TV ad. The first thing someone seeing that would want to do is search for a clip of that ad, and then they might end up on YouTube to watch the video. And then they might want to share it with a friend. So imagine if we could help a company think through user behavior and create campaigns that leverage search, social capabilities and YouTube. . . . Everything will be more integrated.