Google (GOOGL) has recently conducted an ad experiment on YouTube, and parent Alphabet is optimistic about the results. The pause ads pilot is expected to roll out soon, reportedly giving brands that advertise on its platform a substantial lift. Advertisers pay high prices when their brands get prominence on YouTube. CWEB analyzes that increased ad spending adds revenue and profit to parent Alphabet’s stock, leading to better value for investors and shareholders.
During Alphabet’s earning call, Philipp Schindler, senior vice president and chief business officer for Google, said, “In Q1, we saw strong traction from the introduction of a pause ads pilot on connected TVs, a new non-interruptive format that appears when users pause their organic content.”
Schindler also noted that the pause in YouTube ads drove “strong brand lift results” that attracted advertisers willing to pay “premium” prices for placing their ads in this new format.
In 2023, YouTube began showing ads that could not be skipped and ads when video was paused on smart TVs when customers streamed content. When a video is put on shrink, an ad will appear next to the video. Those who have premium subscriptions on YouTube have the option of avoiding ads.
Although Schindler has not mentioned a timeline for rolling out the ads, as the company is still gathering data, they will first appear on smart TVs. The pause ads may be added to other devices, including cell phones.
Although customers may complain about the longer ads, Google’s YouTube offers ad-free viewing and streaming with premium subscriptions. Finally, the customer can watch or stream for free with ads or pay for an ad-free experience.
CWEB notes that Alphabet has to be profitable for its investors, and ad revenues or revenue through subscriptions are essential for YouTube to remain profitable.
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