Google's decision Thursday to shut down YouTube media buying on its programmatic network DoubleClick Ad Exchange (or AdX) signals the tech giant wants tighter control of its growing advertising ecosystem. But the attempt to create a so-called walled garden with video ads has some agency execs baffled.
Under Google's new rules, marketers won't be able to buy YouTube ads through AdX at the end of the year. Instead, they will need to work with Google to make ad buys through Google's AdWords or DoubleClick Bid Manager, which are already used to sell search and skippable TrueView ads.
The problem with that, though, is that ad-tech vendors like TubeMogul, Atlas and DataXu rely on YouTube's technology to power advertising campaigns for brands and agencies. In return, brands get better insights and data about their ads than Google is willing to fork over. Now, tech players will have to look elsewhere to find video inventory, which could be a challenge.
"We're a little surprised," said Rob Norman, chief digital officer at GroupM. "If you were an advertiser and you made a decision to align on a given tech stack that didn't happen to be YouTube, you might be thinking that this has added a layer of inefficiency to your system, just at the moment when you thought you were going to be in more control.
"I was trying to think about who outside of Google is thinking this is a great idea. I couldn't think of anyone."
In a blog post, Google said it's closing the platform because of a "small amount of YouTube buying happening on the DoubleClick Ad Exchange."
"At the end of the day, yes, Google is making it a bit tougher to buy their inventory," said Jenny Schauer, vp and director of media at DigitasLBi. "But on the flip side, that also means that the programmatic advertisers who continue to access it are doing so more purposefully. They'll be less likely to just lump YouTube in with the thousands of other sites as part of an audience buy, and instead make a conscious decision to use that platform to achieve their brand objectives."
When asked about how heavily demand-side video vendors rely on YouTube, GroupM's Norman said, "You have to assume that it's not an insignificant number." In terms of the other inventory that video companies can pick from outside of YouTube, Norman also noted that a good chunk of it is poor quality—also known as long-tail supply.
"The one thing you don't want as an advertiser or as an ad-tech company is to overly increase your dependence on poor-quality supply," he said.
But Raju Malhotra, svp of products at Epsilon-owned Conversant, disagreed that it's tough to find premium video inventory outside of YouTube. And he thinks cutting out tech vendors may be a good thing to help Google sell more ads since it will be able to control price and ad formats.
He said less than 2 percent of his company's media impressions are on YouTube. Instead, Conversant relies on publishers like CBS and CNN to access programmatic, premium video.
"More than half of all video ad impressions today are on YouTube, but Google only gets 20 cents of every dollar spent in online video advertising," Malhotra said. "With features like TrueView that have better consumer experience, it seems Google can monetize this inventory far better if they control this more tightly."