Google Swings and Misses in Latest Attack on TV Advertising

Google has once again mobilised an attack on the TV advertising industry, claiming that video ads served on YouTube are more effective in generating sales than spots aired on the small screen. Yet scratch beneath the veneer of self-interest, and it’s clear that the argument is flawed.

According to the Guardian, central to the search engine giant’s offensive is the suggestion that, in 80% of cases, adverts displayed on YouTube deliver higher returns on investment than TV adverts, a stat derived from an as-yet unpublished report collating research from 56 case studies across eight countries. On the back of these findings, Google suggests that advertisers should allocate up to six times more budget to YouTube than they currently do.

This isn’t the first time Google has unleashed its battle cry towards the TV market, with a report published last year proposing that TV advertisers should transfer a quarter of their television airtime spend to YouTube in order to successfully engage the 16-34 demographic – a point debunked quite conclusively by evidence from Thinkbox. Clearly, Google has its eyes on a prize, yet the angle being used for its approach leaves it open to robust counterattacks from the TV industry.

YouTube Vs TV Advertising

The opening counteroffensive has come from Thinkbox, the UK’s marketing body for commercial TV. Research and planning director Matt Hill responded to Google’s claims by saying its YouTube analysis “misses the point”, stating that “the true value of TV advertising is not in 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.”

This is a telling point. Whilst the costs of advertising on TV are at a 30-year low as a result of unprecedented channel choice and airtime inventory, the brand prestige and consumer trust it cultivates remains firmly intact. Additionally, the average UK adult still watches 45 TV adverts a day, with the average 16-24 year-old viewing 30 ads on a TV set. This dispels Google’s suggestion that YouTube is the best marketing channel for engaging young audiences, with live TV accounting for 43.5% of the daily video time for the average person aged 16-24, compared to 10.3% for YouTube.

This is not to say that YouTube has no role to play in marketing campaigns tailored to engage young viewers, but it should be regarded as a supplement to TV, not a replacement. The small screen provides a level of coverage and quality content that online video cannot match, whilst its ability to target specific audience groups continues to reap considerable dividends for smaller businesses on tighter budgets. On the other side of coin, poor ad placement is a concern for online video advertisers, whilst ad fraud, unrefined measuring standards and the high propensity for ad avoidance are all problems the online market is yet to overcome.

This last issue is of particular interest to us. Research from meetrics suggests that an estimated 52% of online video ads are never seen, with the growing use of ad blocking technology a key factor. Up to a third of all mobile users now claim to have such software installed on their mobile devices, with the Chrome Web Store ironically attracting just under 3 million downloads of Adblock for YouTube. And that’s just Chrome users.

Incidentally, ad skipping in the world of TV is relatively low, with 87% of all viewing on the live schedule. Additionally, there is no major difference in the amount of commercial linear TV that’s recorded when compared with BBC channels – a point that explicates how ad avoidance is not the primary motivation for time-shifted viewing.

Don’t Count the Cost of Lowering TV Spend

Google’s claim that YouTube ads generate higher returns on investment than TV fails to address the long-term upside of advertising on the small screen – with 50% of profits derivable from television emanating after the first year of activity. In the short-term, TV accounts for 33% of all media-driven sales, delivering un unmatched £1.79 in profit for every £1 spent.

Furthermore, half of all TV airtime is essentially free, with a proliferation in zero-rated TV spots driven by the explosion in smaller, niche television channels delivering thousands of additional viewers for no cost and genuine added value for the advertiser. 

Commenting on Google’s latest attack, David Yorath, the founder and managing director of Guerillascope, said: “YouTube has its place in certain marketing campaigns, depending on the audience a business is targeting, yet to suggest that it’s better than TV as a generator of sales is both alarmingly deceptive and laden with self-interest."

"We know how effective TV can be for companies seeking to engage any audience – old or young – and having utilised YouTube advertising as part of some of our own clients’ strategies, would strongly suggest that, unless you want to see your brand positioned in user-generated Minecraft videos, TV represents the most effective use of your budget. Television can work for any business with any level of spend.”