The Future of YouTube’s Ad Empire in the Wake of $170 Million Fine

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The Future of YouTube’s Ad Empire in the Wake of $170 Million Fine

“I think Facebook, Twitter, and YouTube are the cornerstones of any social media strategy.” – Chad Hurley – Co-Founder – YouTube

The above quote aptly describes YouTube’s reach as one of the biggest and most sought-after digital marketing channels on the Internet. In June 2017, YouTube claimed that it touched the mark of 1.5 billion active monthly users. The message from its CEO Susan Wojcicki, since 2014, further added that its users now engage in watching over 1 hour of mobile video. And as of May 2019, 500 hours of video content was being uploaded on YouTube in just a minute.

The staggering numbers shared above are enough for making any online marketer drool with the prospect of his brand getting thousands of eyeballs of exposure. While YouTube is popular with every age group, children are especially fond of this video sharing portal. If you ask children about what they want to become today, a sizeable chunk of them would be interested in becoming a YouTuber!

Ryan ToysReview is the New Benchmark of Success on YouTube

The massive success of YouTube has motivated children and young adults to seriously consider this as a career option. Ryan started earning a handsome income on YouTube when he was 5 years old, and at the end of 2018, he had earned over $22 million that year. And he is not alone as there are several other wonder kids making in the north of million dollars a year by just reviewing toys, apparel or candies.

So, everything looks bright for the company for global dominance for some time to come? There are some issues related to children’s online safety and privacy violations, for which Google, YouTube’s parent company has been fined a whopping 170 million dollars. More on that later in this blog. Let me rewind two years back when YouTube faced its first stern test after a serious issue.

Related Read: 15 Eye-Popping YouTube Statistics Every Digital Marketer Must Be Aware of

Can YouTube Take a Hit, Financially?

Everything is not as rosy as it seems for YouTube. There are some hiccups it needs to solve and quickly as Facebook and other rival companies are looking to cash-in. Around 2½ half years ago, at the start of 2017, companies like Starbucks, Pepsi, and Wal-Mart started to pull ads from YouTube, and other companies like GM and Verizon also followed them.

So, what was the reason for these companies of this sudden decision of pulling off ads from the second most visited websites in the world? YouTube’s ads positioning was the culprit. And this year, YouTube faced severe backlash for failing to protect children using its platform with other issues too related to this. Let me shed some light on this in a bit detail now.

Inside YouTube’s Ad Empire

YouTube’s automated system which determines where ads will appear made the companies change their minds and pull off the ads. Companies, like Pepsi and Starbucks, thought that most of their ads were being placed next to offensive material, including hate speech. According to them, this was seriously jeopardizing their effort to portray themselves and represent the young generation as a cool product.

Another problem which also prompted the companies to pull the plug, in this regard, was YouTube’s business model. The New York Times summed it up in a clear way: “YouTube splits advertising revenue with its users, meaning advertisers risk directly funding creators of hateful, misogynistic or terrorism-related content.”

$170 Million Fine: The Background and Consequences

Google, being the parent company of YouTube, has been fined 170 million dollars on the 4th September 2019 by the Federal Trade Commission in the US. The alleged violation of a children’s privacy law was the main issue here. As evident in the settlement, YouTube let advertisers know that many channels were popular amongst children. The company tracked the viewing history of children and served them ads which are a clear violation of Children’s Online Privacy Protection Act (COPPA)

The fine is in line with what Tik Tok’s parent company received last year but is the biggest in the history of COPPA. This can be termed as a landmark decision concerning Online Child Protection laws. You may think that this is just a one-off case and Google and YouTube’s reputation will not take a hit. But in the long term, for the advertisers and companies looking to tie-up with YouTube, this can have dire consequences.

Google’s Chief Business Officer Philip Schindler took the matter very seriously and tried to come up with a solution quickly. His response was resolute with a clear will to change things for the better. He concluded in the following words: “We know that this is unacceptable to the advertisers and agencies who put their trust in us. That’s why we’ve been conducting an extensive review of our advertising policies and tools, and why we made a public commitment last week to put in place changes that would give brands more control over where their ads appear.”

Related Read: 7 Different Types of Social Videos and How Each One Can Boost Your Business

The End of the 30 Seconds Ads before a Video playback on YouTube?

Google surely knows how to make their customers happy, and with the 30 seconds, ads which run before a video made sure the viewers will look at the ads before they can see their intended video. Now that Google has decided to pull this feature too to make sure the viewers are not forced to see the advertisements, what’s next?

In 2017, YouTube started offering Director’s Mix, a new tool, which was aimed at helping marketers to create hundreds, if not thousands, of variations of their video advertisements. McDonald’s was amongst the first companies to use this tool to their advantage. They created over 77 variants of custom content for a campaign using Director’s Mix and the result was amazing. But all this good work now may be of no use as the fine by COPPA can shake YouTube’s empire in the future too.

Final Word

Just last year, Facebook was fined $5 billion for the Cambridge Analytica scandal by FTC. And now YouTube has faced the music. But it is a serious offense as the violation of children’s privacy laws and online safety can have a significant effect on their lives forever. YouTube has been pushed further by many lawmakers in the US to comply with the laws or face more stern actions in the future.

I hope that this sensitive topic will evoke diverse reactions from the readers of this blog. If you want to contribute to this blog by adding something or if wish to give your valuable feedback, please use the comments section below.

 

hammad.husain@branex.com'
Hammad Husain
Hammad Husain is a Senior Digital Content Producer at Dubai Monsters. He is passionate about reading books, mostly related to current affairs, memoirs, latest trends in technology and sports. In leisure time, he likes to use the Internet and spend time with his family.