YouTube Charges $375K Per Day For Home Page Masthead Ads

The February edition of Fast Company magazine, which features a lengthy piece on YouTube, includes a number of interesting data points.

One that caught my eye is that YouTube charges $375,000 per day for a home page “masthead” ad (these are the rich media 970×250 ads that occupy the top third to half of the home page).

According to the article, the home page generates an average of 45 million views per day (though it’s not clear if that’s U.S.-only or global). A companion article notes that the home page gets 18 million visitors in the U.S. only.

The ad running today, for Lexus’s new CT 200h hybrid is a typical masthead implementation: graphics rich, with embedded video, and links to a series of original, branded videos (in this case “Darkcasting” vignettes).

Last September, in “YouTube Gets centre Stage in Google’s New ‘Watch This Space’ Ad Campaign,” I noted that the premier brands that used the masthead unit in the previous month included Sony Pictures, Lionsgate, Showtime, NBC, Mattel, EA, T-Mobile, American Express and others.

Each has its own creative execution that often extended far beyond what’s typically seen in rich media display ads (my favourite example continues to be the Sly Stallone ad for the movie “The Expendables”).

In the Fast Company article YouTube says that 94 of the top 100 brand advertisers have run some type of campaign on the site to date, and it’s no surprise why given the experience of Kraft’s Philadelphia cream cheese. Kraft’s “Real Women of Philadelphia” campaign showcased Food Network’s Paula Deen urging women to concoct their own recipes and feature themselves in home-made videos. The launch video that was also embedded in the masthead ad was viewed by 51 million people, of which 10 million viewed through to the end and 100,000 clicked through. Philly cream cheese revenue was up by 5% and a community was created for ongoing interaction.

The Philly example illustrates the comment that YouTube’s product head Hunter Walk makes in the article: “We’re a media catalyst. We’ve built the technology platform, aggregated the audience, and now have the monetization tools that allow anyone who wants to create and distribute content to it successfully through a single point, at global scale.” This is especially valuable for non-media companies like brand advertisers which want to go beyond the 30-second spot to create more immersive experiences.

In fact, YouTube is trying to extend users’ interactions with the site, particularly as connected devices bring online video to the big screen. YouTube’s primary effort on this front has been “Leanback,” which Walk says in the article has already doubled the session time to 30 minutes vs. the overall average. That will only increase as connected devices and awareness increase.

There’s not much controversy to be found in the article, with only one thing standing out: monetization head Shishir Mehrotra’s comment that “The cost of creating content is quickly going to zero – it’s a lot more about how creative you are than about how big your studio is and whether you in Burbank or not.” That’s an exaggeration, though the general point holds that YouTube enables anyone with an idea to find their audience and then attempt to monetise it. In this regard, becoming a trusted distribution/monetization partner for content providers, has been one of YouTube’s biggest accomplishments. The article says that “Content ID,” which protects the copyrights of YouTube content partners, now accounts for one-third of the more than 2 billion views that YouTube monetizes each week.

A year and a half ago, in “Does It Actually Matter How Much Money YouTube is Losing?” I took the position that YouTube occupied a highly strategic and valuable role in the video ecosystem, and that despite its current losses, these would be more than offset by the site’s long-term benefits and upside to Google. Though Google has been famously opaque about YouTube’s revenue and profitability, given the surging interest in online and mobile video – and big brands’ desire to get involved – YouTube is looking more and more like a winning bet each day.

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