Though Ryan Higa may operate the most-subscribed channel on YouTube, he had his humble roots as a regular user, and still has a film-class low-key aesthetic. And now, Higa’s content is being monetized in the same way as CBS (s CBS) and other premium YouTube (s GOOG) partners — that is, with pre-roll advertising. We noticed this week when we loaded up one of Higa’s latest videos that a 15-second ad for UFC wrestling preceded it.
Pre-roll advertising is the most lucrative way to monetize a video; ads come in the same form as TV, they take over the entire video player, and they run before content has started. But the thing is, you need to make sure a would-be viewer really does want to watch what he or she has clicked on, and isn’t going to be turned off by the interruption of an ad. Basically, the content needs to be premium enough to merit the advertising. And it seems YouTube has now determined Higa’s Nigahiga channel is just that. The user partner pre-rolls appear to be in limited testing; in clicking around we saw the same UFC pre-roll ad on a CollegeHumor video as well.
Update: YouTube spokesperson Aaron Zamost replied to our request for comment over email with the following:
We starting serving pre-roll ads on some short form videos awhile ago — CBS, ABC, etc. Our ad formats are flexible enough to allow partners of all kinds to make decisions about how they want to monetize their content. So when your article states “it seems YouTube has now determined Higa’s Nigahiga channel is just that,” this isn’t totally accurate. This is a option for partners who believe this is a good ad format for them, that their content is of the type that such advertising won’t be disruptive, that it may be a more effective way of making money, that their audience will accept it, etc.
Way back in the day when YouTube had no in-video advertising, the company said it was fiercely opposed to pre-rolls, and that it would prefer to push the industry forward with more unobtrusive and engaging formats. Google CEO Eric Schmidt told analysts in early ’07 that pre-rolls “have historically not made sense,” adding “there’s some evidence that the traditional pre-rolls people have done did not work.” From August 2007, when YouTube introduced overlay ads:
When asked what kind of ad formats did not test well with the YouTube audience, Seth replied emphatically: “Pre-rolls and post-rolls did not perform well on our platform. [In our testing,] 75 percent of our users were unhappy with them.”
Since then, YouTube has reversed its stand on pre-rolls; it first rolled the ad format out alongside a big premium deal with CBS that included full TV episodes — the kind of content people expect to see pre-rolls on. But that’s not to say many people in the industry have given up the desire to find something better than just repurposed TV ads.
However, on the most recent Google earnings call, execs in effect previewed the Nigahiga pre-rolls, saying YouTube was beginning to release more pre-roll inventory to advertisers than what had been available before. And hey, bulking up your premium offering by elevating a home-grown talent seems pretty convenient.