Why ‘ad-free’ YouTube Red will actually be filled with ads

Zach is a media analyst at Fabric Media.

YouTube Red, Google’s $10 per month ad-free subscription tier, has finally arrived. And when you look at the pure volume of content and consumer demand, it’s easy to see that Red is justifiably the sensible next step in the video service’s evolution.

The move to launch YouTube Red, however, is also about a viewer’s preferences for how that content is consumed, according to Juan Bruce, CEO of Epoxy, which helps YouTubers market and measure video across social channels. “Every platform entering the video space gives viewers another option for how they want to interact with content, whether it’s traditional YouTube, live streaming, a Vine feed, Facebook’s social experience or paid services.”

It’s also a potential cash cow, is it not? There’s an OTT land grab right now, so why wouldn’t the platform with (arguably) the most loyal video community on the web make a go of it?

In addition to its new premium features, Red will offer premium content, created specifically for the platform and available only through its service. Creators like The Fine Bros, PewDiePie, Joey Graceffa, Lilly Singh, and Rooster Teeth are just a few of the individuals committed to creating original material for the newly launched service.
The alleged draw of the new premium content from PewDiePie and others will be twofold: 1) the subscription revenue will help pay for content exclusively produced for Red customers; and 2) the content will be uninterrupted, or ad-free. The problem with the latter is can you truly call it uninterrupted ad-free content if you have native advertising involved?

Call them native ads, brand sponsored content, or what you will, the point is, ads are pervasive and baked into the actual creative of so many top tier YouTube channels. Even the TV industry is incorporating native ads in-program, so are we to expect the YouTube market to change when it has been incorporating branded content into videos for years?

‘Ad-free’ threatens YouTube’s business model (and consumer trust)

The above calls into question two things: what does ad-free mean to creators and digital networks on YouTube who rely on brand deals? And, assuming YouTube doesn’t bite the hand that feeds it, is Red really delivering consumers an ad-free service?

Considering the economics of legacy YouTube — YouTube channel sponsorships, in-video brands integrations — there’s a lot of questions surrounding how the existing native advertising model fits into a premium “ad-free” YouTube subscription service. For YouTube creators and multi-channel networks (MCNs), integrating branded content natively in videos is a key revenue driver. In fact, we’re seeing these types of branded integrations popping up all over the Internet — from the gaming industry and its sponsored levels in Zynga to the music industry and its branded pop-up stations like the Halo 5: Guardians station on Dash Radio.

Frank Sinton, CEO of Beachfront Media, knows the industry intimately, having worked with over 100 YouTubers to deploy apps across connected TVs and mobile phones. He points to a specific YouTube native advertising example from Dude Perfect, saying: “The ads in his content are part of the video. If it’s supposed to be an ad-free platform, it should be completely. But how does that happen?”

YouTube is saying it’s sharing new subscription revenue with creators, but what about brand deals? Where does YouTube stand on native brand integrations being a part of YouTube Red?

There’s no need to guess. Google-owned YouTube already informed the market where it stands earlier in the year. More specifically, it happened when YouTube made moves against brand-sponsored videos, requiring creators and MCNs to work Google’s sales team for deals.

Go forth, and question

At an initial glance, the premium features of YouTube Red are enough to sway a portion of the population over to the subscription-based model. Especially with the promise of premium content from top creators in the not so distant future, but the term “ad-free” has been brushed over, and applied to the platform without any real concrete details. With all of the new features YouTube Red is offering, it’s definitely worth a shot,  just don’t be disappointed when “ad-free” turns out to be “pre-roll ad free” and a lot of branded content.