Ad-Tech Firms Spy an Opportunity in YouTube Inventory Quality Scandal

YouTube has been on the defensive since June when a report from research outfit Adalytics accused the video giant of misleading buyers. Now, some independent ad-tech firms, long in an uphill fight with Google for digital ad spend, are trying to use the findings to win new business and accelerate sales cycles, according to sources. A sales executive at one ad-tech firm, who requested anonymity because they did not have authorization to discuss their company’s strategy publicly, has said about five agency clients, (or between 5%-10% of their sales), have agreed to commit money to their firm on the back of the Adalytics YouTube report. The campaigns haven’t yet started. “[We’re] putting that elephant in the room,” the sales executive said, referring to bringing up the Adalytics report during meetings with clients. The firm contrasts its approach with Google’s, telling clients, “We are fully transparent.” Made for Advertising Sites Are Programmatic's Latest Boogeyman Ad-tech firm Chalice Custom Algorithms won a new agency client last week on a much quicker timeline than a typical sales cycle, said Adam Heimlich, the company’s CEO, after the client was looking to diversify spend away from YouTube. “The advertiser’s perception [was] that taking control of the algorithm was suddenly essential,” Heimlich said. A buyer source at a media agency said their organization is now working with several new ad-tech firms since the report dropped. The agency, along with several others, is planning to pull spend from YouTube’s network of third-party inventory, Google Video Partner (GVP) network, after the Adalytics report found that buyers were inadvertently paying to have their ads on GVP, where inventory was lower quality than promised. “A ton of budget from YouTube… needs to be allocated,” the buyer said. “We now have more flexibility to experiment where before we did not.” The Adalytics report presents ad-tech firms with an opportunity, though not necessarily rare. Negative headlines regularly come out about Google, from antitrust suits to layoffs, to the threat of generative AI on its search dominance. But less often do reports strike such a direct blow at Google’s relationship with media buyers, its dominant revenue source. What remains to be seen is whether more ad-tech firms can capitalize on this opportunity and whether this particular news item will stick. “You have the history of the Google infractions, usually [any one is] just a blip,” said Shiv Gupta, founder of ad-tech education outlet U of Digital. Ad Buyers Redirect YouTube Strategies After Report Accuses It of Violating Standards When asked for comment, Google referred to a blog post that called the Adalytics report inaccurate. Last week, Google updated its initial response to the report with new findings from DoubleVerify and Integral Ad Science, brand safety firms that themselves have been implicated by Adalytics’ findings, both reporting that 93% of GVP inventory is viewable. In comparison, Adalytics found that 80% of GVP budget for the TrueView ad format went to muted, auto-playing, obscured, or out-stream placements, which contrasts with Google's policies for the formats. Google, including YouTube, is anticipated to receive 26.5% of all digital ad spend this year, according to Insider Intelligence estimates from late last year, making the company the single largest media channel among U.S. advertisers. Winning market share from Google is often a tough proposition for independent ad-tech firms, who most often traffic in the open internet versus a walled garden like YouTube. Trading on trust The Adalytics report accused YouTube of misleading its buyers, which gives an opening for other firms hoping to deepen relationships with media agencies. “It’s a trust thing at the end of the day, which is a foundation for a lot of media relationships,” the sales executive said. Even ad-tech firms not directly using the report to win business are flexing their fidelity when the topic comes up with clients. MiQ, which helps buy programmatic inventory on behalf of advertisers, said the report serves as a validation point for clients, as MiQ's long-standing buying recommendation has been to avoid GVP inventory. Ad-Tech Job Openings Crater in 2023 “If this is happening in Google, this kind of thing can be happening everywhere, so you need trust,” said MiQ chief revenue officer Charlie Near, who noted the company is platform agnostic. “It’s a validation point because our exposure was so low.” Adelaide, an attention vendor, isn’t using the report in sales pitches directly, but said when it does come up in conversations with clients, the company can use it to differentiate its solution, said CEO Marc Guldimann, as attention solutions are still a relatively new to market way to evaluate media. “It’s just a nudge and the constant drumbeat,” Guldimann said. “What you could call disingenuous media activity makes people more and more likely to look for something new and better.”

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Ad-Tech Firms Spy an Opportunity in YouTube Inventory Quality Scandal

Some firms have won new business, arguing they offer a more transparent way to buy media

Catherine Perloff

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Catherine Perloff