Monday, September 5, 2016

(The Big Disrupt) Youtube: Why You Tube enforcing its ad guidelines is a colossal mistake (at first)

All great companies make mistakes but YouTube, by enforcing it's strict ad friendly guidelines, is making a whopper that may bring the Google owned video platform to it's knees. 

As far as "ad friendly" rules go, YouTube's four year old rules regarding content appeals to advertisers have to be the most broad and ill thought out guidelines to ever grace the internet. The rules outlaw partial nudity, sexual humor, Violence, "inappropriate" language, the promotion, selling and use of drugs, and controversial and sensitive subjects and events. However, what sent  YouTube creators everywhere into a rage was the passage that stated videos that had elements of any of the above would "not be approved for monetization"1. 

With this recent drive to enforce its ad friendly guidelines, YouTube has proven it's just as bad as its parent company in dealing with content creators as what's new about its four year old policy is that they'll send notifications when the guidelines are violated as opposed to in the past where they wouldn't have said anything leaving content creators baffled as to why their videos won't make any money. 

As Forbes's Fruzina Eordogh pointed out, the relationship between YouTube and content creators is strained because, quite simply, the balance of power is firmly in YouTube's favour which allows them to make changes without giving content creators notice or seeking their input on changes that affect them directly. The recent rift between YouTube and creators isn't new is likely to get worse than better as creators have very little recourse to address YouTube tendency to walk over its "partners" 2. 

This scenario is become more prevalent in an age dominated by companies that operate in two sided markets such as Uber which go out of their way to impose their will over their workforce. However, in YouTube's case, the reasoning behind the recent enforcement of the guidelines make no sense.            

Maybe with the exception of the inappropriate language and controversial subjects prohibitions, creators could have lived with the rules as some of them are already in the platform's terms of service and community guidelines but with YouTube choosing to enforce rules they've had on their books retroactively, YouTube is risking losing some of it's most popular creators who could take their large audiences with them. 
YouTube couldn't have picked a worse time to enforce these rules as it's dominance in the video ad market is being tested by deep pocketed players. If YouTube persists with enforcing it's guidelines, it may lose it's most prominent users to other platforms, most likely to Facebook who has been courting content creators for some time now.  

Why YouTube would choose to alienate the vast majority of their most popular creators (some of which who buy YouTube ads) who produce content that violate their newly enforced guidelines seems inexplicable given much of the content that violate their guidelines is the most interesting and popular work on the platform. One explanation for the newly enforced rules is that YouTube is taking steps to protect the brand of their advertisers but the irony in all this is that a great deal of  YouTube's advertisers will break their narrow ad friendly guidelines and potentially affect the brands of their creators (for example, a McDonalds pre-roll ad before a healthy eating show).   
Nonetheless, YouTube are well within their rights to introduce and enforce rules as they please and they'll continue to do so. However, they may well pay a steep price because of it. It may be a price YouTube can afford with change to spare as the company has made no secret of its plan to make its mark in the TV ad market. Earlier this year, Google opened a can of worms by publicly courting TV advertisers to send their ad spend YouTube's way claiming brands can reach millennials more effectively with YouTube and than any TV network. Google even had numbers to back up their claims and little over a week later in May, Magma Global pledged to their $250 million TV ad budget to YouTube 3 

A month after that, Google was at it again citing a YouTube and YouGov poll that found that if made to choose, "41% of those surveyed would pick YouTube over TV, video subscription services, or streaming sites" 4 

With Google putting all this effort into attracting TV ad buyers, It seems quite clear that Google's long term strategy is to establish dominance in the TV ad market so it can gain control over networks much like it has over publishers and ultimately, the content they produce.Very few networks are in a position to compete with Google for ad dollars as none of them have the cash, expertise, or audience. TV networks have long been sheltered by from real competition in the marketplace as they largely relied retransmission fees from cable and satellite pay TV providers and advertising for their daily bread. 

However should Google secure a dominant position in the TV ad market (which isn't beyond the realm of possibility), Networks will have no choice but to compete in the marketplace for ad dollars with Google, a battle they'll eventually lose and be forced to partner up with Google or take scraps left in the marketplace. TV networks will become more dominant on retransmission fees offered by cable and satellite Pay TV providers which look set to decrease over time after years of eye watering hikes as the pay TV business matures 

The only saving grace for TV networks that might halt Google's March to total dominance in the TV ad market is their outright monopoly on live (mostly sports) events content. However, with YouTube recently proving that it can broadcast large live events such as the Champion's and Europa League finals without a hitch, networks only real advantage over digital platforms becomes less secure. 

What all this means is that while Google might face competition from other deep pocketed giants such as Facebook, Google could end up being the most powerful company in TV land that produces no content whatsoever. 

In sum, YouTube, may lose some of its most prominent YouTube stars but should it's parent company realise its ambition to control the distribution of high quality content  through the dominance of the TV ad market, YouTube will get over it fast.     

  1. YouTube, 2016, Advertiser Friendly Content Guidelines, 
  2. F. Eordogh, 2016, Making Sense of YouTubes's Great Demonetization Controversy of 2016, 
  3. S. Vranica, 2016, Interpublic to shift $250 million in TV ad spending to YouTube, 
  4. L. O'Reilly, 2016, YouTube has released yet more research saying it's bigger and better than TV in a bid to steal ad dollars,


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