Advertisers are leveraging YouTube primarily for branding, while they’re turning to portals like Yahoo, AOL and MSN mostly for direct response campaigns or combination branding-direct response efforts.
In the first half of the third quarter, branding was the objective behind 78% of homepage ads placed on on YouTube, according to Macquarie, an investment bank. The percentage of pure branding campaigns on other sites tracked by Macquarie was much lower: Yahoo (39%), AOL (31%), and MSN (17%).
Branding campaigns are generally perceived to be of higher quality and less intrusive to users than direct response ads. The latter contain prompts for users to click through, sign up for an offer or service, or take another action.
RBC Capital Markets estimates that YouTube generated $US4 billion in ad revenue last year and we can extrapolate from the data above that much of that was from branding campaigns. For comparison, AOL and Yahoo combined generated approximately $US3.3 billion in revenue last year.
Now, AOL and Yahoo are taking a page out of Google’s playbook by investing in their own video platforms to attract more quality advertising. Marissa Mayer explicitly mentioned Yahoo’s shift to video in last quarter’s earnings call. AOL recently acquired video ad platform Adap.tv for $US405 million — its largest acquisition in years.
Meanwhile, e-commerce sites are building ad businesses of their own to meet the needs of direct response advertisers, and are more than happy to do so because it feeds directly into their own retail sales. Some estimates put Amazon’s 2012 ad revenue at slightly more than $US600 million. So far this quarter, 61% of Amazon homepage ads had direct response objectives, says Macquarie.
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