YouTube Red | How will the Subscription Affect Advertising?

October 22nd 2015


We’ve all seen it. We’ve all clicked it. But what would happen if we could stop it coming back?

Yesterday, YouTube announced the release of a paid subscription service called YouTube Red. The $9.99/month price tag allows access to exclusive content, offline video viewing, multitasking (videos continue to play after exiting the app) and saying goodbye to all YouTube ads for good.
Although YouTube Red seems promising, removing ads could affect companies advertising on the site.


Firstly, it is a good idea to look at how the YouTube advertising system works now.


Google TrueView is one of the most effective ways to advertise your product on YouTube. You can have your ad shown in three ways:


  • The video is visible at the top of search results. You define the terms in which your video will be appear.


  • These adverts are at the top of the sidebar. You can tailor the type of videos beside which yours will appear.

For both of these options, you only pay when viewers click on the video.


  • These are the much loved ‘skip ad’ videos. They play before the start of a video and after 5 seconds viewers can click skip.

For In-Stream adverts, you only pay when people either finish the video or watch it for 30 seconds.

The point of TrueView is to be non-invasive. Users can skip adverts or simply not click on them. Viewers do not see the advert and advertisers do not pay if it is not seen: a win/win situation it would seem.


So how will YouTube Red change the face of YouTube advertising?


Will adverts change in terms of style and content?

The subscription will rule YouTube adverts as void. How will businesses now market their products?  It could bring rise to a change in advertising techniques, such as more user generated content.

Right now YouTube advertising is relatively low key. Perhaps with less of a viewer reach companies will need to be more intrusive with their adverts.


Will content creators (or companies who have invested in video advertising campaigns) have to pay to upload content?

Content creators may have to subscribe to the service before they can upload public content. This adds to the budgets of online video campaigns, so could render YouTube as less appealing for upstarting companies.

In terms of revenue, this service will most likely benefit those content creators with a large number of subscribers. It has not been fully revealed how it will be rolled out, but it is said that 55% of the profits will go towards the creators.


Will YouTube users even want to pay to remove ads rather than continue with a service that they can get for free?

It is worth noting that it will be an optional service. If we look at the numbers of other similar subscription services, it could be tempting to say that it will just be a case of ‘can’t pay, won’t pay’.

Spotify, for example, is one of the most similar subscription services to what YouTube are offering. Of Spotify’s 75 million+ users, around 20 million pay the subscription: just over 1 in 4. In other words, 55 million users are happy to keep the service free and have adverts.

Android and Apple games sometimes offer the option of paying to remove in-game adverts. The term ‘banner blindness’ has been attributed to gamers who have become numb to the adverts shown in banner form. What this essentially means is most of the time, gamers are happier to have in-game adverts than to pay to remove them.


YouTube Red has been labelled as a combination of Netflix and Spotify. For around $10/month this could be a big pull for users. It is going to be introduced to American consumers on October 28th. With it comes the challenge for businesses to attract customers to their services without necessarily having adverts to do so. It will certainly be something to keep an eye on if you are looking at using online video advertising.



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