Google has released a report that says ads on YouTube give marketers a better return on investment than expensive TV commercials.
The study is based on analysis across eight countries and shows that four out of five times YouTube ads were more effective than their TV counterparts at driving sales. According to the report, Google advises that advertisers should be allocating up to six times more of their budgets to YouTube than they currently do. However, it should be stressed that the report should be put into context as it only focused on European markets.
Interestingly, YouTube announced plans late last year that would allow users to pay a monthly premium that would block pre-roll ads.
Google said of the findings: “In more than 80 per cent of media mix optimizations we studied, data showed that the recommended spend on YouTube should be at least double that of current levels.” A spokesperson for one of the analytical firms behind the research said of the findings: “We found that while TV maintains a powerful impact in the digital age, digital video is under-invested in several categories we measured in the UK, France and Germany.”
However, the report contradicts findings by UK TV marketing body ThinkBox from 2014 that showed for “every £1 spent on advertising, TV is the best profit generator.”
Thinkbox’s planning director, Matt Hill said that Google’s new research “misses the point” of TV advertising. “The true value of TV advertising is not just its return on investment [getting people to buy stuff], but that it achieves the best return on investment at the highest levels of investment. TV builds brands better than anything else and creates the most profit.
“Online video should increase but this should be funded by using money from less effective ad budgets, such as online display, or finding new money.
“What this study really shows … is that online video is a better advertising investment than other forms of online advertising. Advertisers involved in Google’s research make it clear they see online video not as a replacement for TV, but as an addition and a complement,” Hill said.