YouTube focuses on enhancing CTV experience, leverages AI to inform ad breaks

Google’s YouTube grew its presence on the home’s largest screen in 2023 and the video platform’s product team has been at work to deliver a better ad experience as it seeks to become a “must-have” app for the living room and monetize connected TV (CTV) viewing.  

Since February of last year YouTube’s share of total TV time in the U.S. has surpassed that of other streamers including closest competitor Netflix as the most-watched platform, according to Nielsen’s The Gauge. While its share dipped in December, YouTube still led the pack and garnered 8.5%  of TV time that month (note this is the YouTube app, not including live streaming TV virtual MVPD YouTube TV).

On Tuesday Google-parent Alphabet reported YouTube ad revenue of $9.2 billion (without breaking out CTV ad revenue) and executives reiterated a focus on CTV and the aim for YouTube to be a “must-have” app on every connected TV. That includes the addition of NFL Sunday Ticket last year via YouTube TV and YouTube Primetime Channels.

As noted by TVREV analyst Alan Wolk in a recent column, the YouTube app has made its way onto most smart TV platforms with OEMs and integrated into MVPD set-top boxes from major pay TV providers including Comcast and Charter.

As it eyes CTV growth, YouTube in 2023 worked to make the living room ad experience more attractive to advertisers and less intrusive for viewers.

StreamTV Insider recently spoke with Romana Pawar, director of CTV product for YouTube Ads who’s responsible for monetizing the platform’s ad experience on CTV.

“We are laser focused on improving our viewer, our creator and our advertiser experience,” Pawar told STV. She cited an evolution where viewers increasingly opt to consume more content on CTV, a pattern that accelerated around the pandemic and YouTube saw watch time grow.  According to YouTube, in 2021, over 700 million hours of YouTube content was watched daily on TV screens.

Across YouTube and YouTube TV, the platforms reached over 150 million people on CTV in the U.S. which Pawar described as “very exciting for us” but “also a huge responsibility.”

“We are trying to find innovative ways for advertisers to connect with those users, while keeping the experience engaging for users,” she said.

In 2023 YouTube introduced Pause ads, which Pawar said are a classic example of a non-interruptive format. It also launched 30-second non-skippable ad formats. Pawar said YouTube’s been very pleased with results, citing broad adoption across a wide variety of advertising verticals.

“This [30-second non-skippable format] is really resonating well with the new experience that we’re building on connected TV, where we are interrupting the users less frequently, but we are showing you a longer ad break,” she said.

According to YouTube research, viewers expect a different ad experience depending on the type of content they’re viewing, be it long-form or short-form. In a September blog YouTube said 65% of YouTube CTV watch time is on content that’s 21 minutes or longer. For long-form, Pawar said following the user study, YouTube realized “that users care a lot about frequency of ads.” It found 79% of YouTube users prefer ads that are grouped together instead of distributed throughout long-form content on CTV. It’s an approach YouTube’s tested and seen positive results. In early testing, when exposed to fewer but lengthier ad breaks, over half of YouTube CTV viewers experienced a 29% longer viewing session before their next ad break.

It’s not only driving better engagement, but improved returns for advertisers, according to Pawar.

“We are delivering higher ROI [return on investment] than TV as well as online video,” she said, according to measurement by third parties including Nielsen, TransUnion and Ipsos MMA.

YouTube also found most viewers would rather know the total time remaining in an ad break over the number of ads they’ll view. It actioned on the insight, in December rolling out CTV updates where viewers see a countdown timer showing how much time is left until the break ends or until they can skip to the content.  

Leveraging AI to inform ad breaks

YouTube is also leveraging AI from Google to help inform ad break length and frequency.

Recent consumer research from Comcast’s FreeWheel Viewership Lab pegged two minutes or less as the optimal ad break length to improve brand impact and ad experience. After breaks reach three minutes, the number of viewers who felt ads were intrusive doubled.

On YouTube, CTV ad breaks are somewhat dynamic, as Google’s AI engine is at work. Asked about the number and lengths it’s typically testing for CTV advertising, Pawar acknowledged pulling from many signals and said unlike linear TV where there’s an ad break every five or 10 minutes, on YouTube there isn’t one answer.

“Ultimately this is where our Google AI models came in,” she said. “It really depends on the length of the session, the kind of content you’re viewing, what is the more natural ad break in that content - we don’t want to interrupt you.”

So multiple factors are at play in how YouTube determines ad breaks, including time on page, the device and length of content – which all serve as inputs for the Google AI to decide what format or how frequently to serve.

YouTube has also incorporated more shoppable elements, using CTV ads to send consumers more information via a second device.  

Pawar said it’s been going pretty well since announced and noted the second screen really helps on the non-intrusive ad front, leaning into consumer behavior as most people are multitasking or looking at their phone while watching TV.

With the format, users see an ad on the TV screen, can hit a button and send more information to their phone to browse or interact later. After which, the company measures actions like site visits, conversions and actual buys for advertisers.

And tapping into advertising for its partners on CTV screens is important, she said, because it helps brands connect with YouTube users that otherwise wouldn’t be reached.

“We have found that there is a large percentage of users who are choosing to watch content exclusively on their TV screen,” Pawar said.

As to whether YouTube plans to add interactivity to CTV ad formats like polls or trivia, as some other streaming payers have, Pawar said it really comes down to user engagement.

“If viewers engage, let’s say, with any of those formats, for sure we would consider them and scale them,” Pawar said, adding every format launched balances user and advertiser value.

As YouTube continues to hold share in the living room, Wolk, in his earlier column raised the key question of: is YouTube, with its user-generated and creator content, actually “TV”?

Wolk contends “sometimes it is and sometimes it isn’t,” claiming the answer isn’t a cop out as in addition to comedy clips and cooking tutorials, “there are actual TV shows and movies on YouTube and web series that feel a lot like TV.”

In his advice to advertisers, the analyst said for now, they need to put YouTube in its own distinct bucket.

“It’s not a 1:1 replacement for any sort of television, streaming or linear. But it’s also not social video. It is its own thing and that’s okay – clearly audiences like whatever it is,” wrote Wolk.