YouTube

What does the ad-pocalypse mean for the future of YouTube?

By Adam Westbrook 27 April 2017
Summary

No-one comes out of this one unscathed.

It’s a big day if you care about big tech companies: Microsoft, Alphabet, Intel and Samsung are all releasing their financial results for the first three months of the year.

And one to watch closely are the stocks of Alphabet, the parent company of Google.

That’s because the tech giant’s spent a lot of the last month or so firefighting a PR storm over how adverts run on YouTube.

And the “YouTube Ad-pocalypse”, as it’s now known, has left pretty much everyone involved worse off.

How it all played out

Back in March the video sharing site was accused by MPs and the press of profiting from extremist and hate videos.

It turned out that the algorithm that automatically allocates the ads that run before or after videos was not distinguishing between videos that are “brand friendly” and those that are not.

Thus an advert for the RAF was found playing after a video with anti-semitic content; elsewhere a video of a hate preacher was essentially sponsored by L’Oréal.

The response from the ad industry was swift: a raft of big brands including Starbucks, the BBC, McDonald’s, VW and Dominos Pizza (to name just a few) all withdrew their ads from the platform with immediate effect.

Alphabet’s shares lost 4% of their value and haven’t yet recovered.

Another sting for YouTubers

The real losers though were the creators, many of whom rely on YouTube for their income.

YouTubers immediately reported a drop in their advertising revenues, a problem that seems to have only worsened over recent weeks.

In an understandable act of damage control, Google has been tightening up its algorithms in an attempt to coax back big brands.

In doing so, it has “demonetised” videos which have even the slightest whiff of controversy, be it political or social.

Some YouTubers, including the popular comedy channel h3h3 have found ads completely stripped from their videos.

It’s become another pain point for professional creators on YouTube who, over the past few years, have been able to build a reliable income solely from their YouTube videos.

Many have complained that, once again, the video sharing platform has acted with no transparency or dialogue with its core users.

Apocalypse when?

But before you feel too sorry for people who get to make a living diarising their lives, this is what happens when you put all of your eggs in one basket – an opaque multinational basket, that relies on an antiquated income stream at that.

As we have argued several times over the past two years at The Memo, YouTube is an advertising platform not a video platform: the ad money will always take priority over the human beings who use it to create and watch.

So it goes.

But no-one comes out of the ad-pocalypse unscathed: the advertisers have been humiliated; it has cost many independent creators sorely needed money; and the whole thing’s thought to have cost Google $750m in lost revenue.

But is this ad-pocalypse truly apocalyptic?

It has some diehard users threatening to leave – but as those users were no longer bringing in ad revenue it’s probably little loss from Google’s point of view.

In fact, for the time being, YouTube has little to worry about.

As several successful YouTube creators have admitted, there is – right now – no alternative that offers the same discoverability or community that YouTube does.

And that means the video giant can relax – that is, as long as today’s financial results aren’t too grim.

If you want to be a YouTuber, you gotta be on YouTube, whenever the horsemen come forth.