Google Inc (NASDAQ:GOOG) has launched YouTube “TrueView” for shopping. The new ad product embeds links in videos that users can click to be directed to third party shopping sites. Industry experts see the addition of TrueView ad links as a move against Amazon. Google Inc.’s direct marketing ad revenues have been hurt when users leave YouTube to search Amazon.
TrueView to Bolster YouTube Revenues
Global online ad revenues for the online ad market almost doubled to $11.2 billion from 2011 to 2014. IHS expects online ad revenues to surge to $19 billion in 2017 from approximately $13.8 billion in 2015.
With 1 billion active users each month, YouTube leads online ad market growth generating over $4.2 billion in revenues in 2014. Despite delivering such huge revenues, YouTube profits have begun to slow due to a rise in costs associated with generating content and developing technology.
The Trueview feature may offer a short-term respite to the concerns of YouTube. The ad product redirects users to third party sites to purchase products, increasing the company’s direct advertising revenues. Other recent product efforts by Google to improve its ad revenues are Google Express and Google Wallet.
After users view a product or brand related video in Youtube, Google sees a 13% increase for search for two thirds of brands, says Google’s senior vice president for ads and commerce, Sridhar Ramaswamy.
Moreover, Ramaswamy argues that, this shopping format will be appreciated by shoppers, as more people are preferring to watch videos when choosing a product rather than looking at print catalogues. The company has already conducted tests on brands like Sephora and Wayfair. Wayfair showed “almost three times the revenue per impression served” as compared to its earlier campaign.
Even Sephora showed more than 80% increase in considering the product as well as 54% growth in ad recall having an average view time of almost two minutes. Google is leveraging its Google Shopping technology and infrastructure for building Trueview in Youtube. Retailers will be able to endorse their products alongside video ads. YouTube is also giving the option to close the overlay ad windows for the users who are not interested in buying.