Food and beverage brands have enticed hungry consumers for decades with juicy chicken sandwiches and oven-fresh pizza in TV commercials at dinnertime. It’s classic contextual advertising—matching a product to the context in which the ad will be seen, without much user data in mind. Over the past year, an unlikely new mealtime behemoth has emerged, blurring the divisions between user-generated and major studio content, to tantalize hungry TV watchers more precisely than ever: YouTube.
Since 2022, YouTube has attended the annual IAB NewFronts event in New York, pitching and positioning itself to advertisers as a legitimate TV platform. YouTube is now a formidable competitor in the CTV space against big streamers like Netflix and HBO Max—in fact, at the 2023 upfronts, 48% of all advertisers reported allocating upfront ad spend to YouTube, second only to Hulu.
That other 52% of advertisers not taking advantage of YouTube are missing out on a huge source of value for their clients. Is too much of our industry still failing to take it seriously as a product discovery hub? The couch-watching context, the vast reach that only expands as linear TV’s reach dwindles, the wealth of user data, the low cost of entry—these all mean CPG brands should be aggressively allocating to YouTube in their CTV budgets.
CPG, meet CTV
Catalina Crunch, a healthy snack brand we work with, saw its best ROAS ever with YouTube CTV this year. It was a big discovery for us; we hadn’t expected CTV to be the best performer for crunch mix and cereals. We replicated a similar strategy with Dymatize protein powder, and the brand’s conversions per view are already well above standards and tracking toward another record response.
These kinds of results aren’t reserved for the biggest brands with the fattest budgets; YouTube is more affordable than premium advertising-based video on demand services like Peacock or Pluto TV, which often charge significantly higher CPMs.
Why YouTube CTV drives results
YouTube’s suitability for food, beverage and other CPG brands goes way beyond context. Its programmatic marketplace offers precise targeting based on given demographic, behavioral and contextual factors, real-time bidding and highly measurable results. YouTube’s interactive features like annotations, end screens and cards encourage user engagement and drive traffic to your brand’s website or other platforms.
You might be thinking, “Isn’t YouTube’s ad revenue down this year?” And you’d be right: The company reported a decline of 2.6% year over year in the first quarter of 2023. But that hardly means it’s declining in reach or effectiveness—YouTube Shorts has become the platform’s new focus area, competing with paid social advertising. Shorts recently surpassed 50 billion daily views and can now be viewed on smart TVs. The company also expanded the accessibility of snack-sized Shorts in video reach campaigns and expanded reach ads into the home feed to sweeten the deal for advertisers.
Challenges in YouTube advertising
There are a few downsides to advertising on YouTube, of course. YouTube is a walled garden, so advertisers face challenges in analyzing campaign data and integrating it with data from other channels. Many YouTube ads are skippable, so brands will need to hook a viewer in the first five seconds (not unlike paid social). And brand safety can be a concern when marketers have limited visibility into the content adjacent to their ads on YouTube.
But don’t let the drawbacks stop you from experimenting; they are far outweighed by the drawbacks of other CTV inventory, which can be cheaper but of lower quality, or premium quality but smaller scale. The cost-benefit analysis checks out.
Be careful not to fall into the trap of third-party inventory like Google Video Partners (GVP), which recently came under scrutiny for violating quality standards. Stick to direct YouTube inventory.
Try a bite
There’s big potential on YouTube for food and beverage brands; we owe it to our clients to recognize an opportunity when it arises.
Whatever type of eater you’re appealing to, they certainly have a community. Cooking demonstrations and recipe tutorials are hugely popular on YouTube Shorts. Celebrity TV chefs like Gordon Ramsay and Rachael Ray stream entire shows on their YouTube channels to millions of subscribers—they’re perfect places to advertise food and beverages. Depending on what kind of product you have, try fine-tuning your targeting to mealtimes, sporting events, family versus single lifestyles or music video subgenres.
Take advantage of YouTube’s consistent quality and lower costs. Your new, hungry customers will thank you.
