Alphabet uses the power of YouTube for lucrative advertising contracts
Alphabet Inc. (GOOGL) is one of the leaders in the field of digital advertising. Still, the company has much less influence in video advertising due to high competition. The tech giant intends to succeed in this business, using the potential of its YouTube service. Alphabet, or its Google division, has been trying to make money on video advertising for a long time. The volume of this industry at about $65 billion annually. Previously, Google had short-term advertising contracts with Disney, but later the latter chose another partner to organize the display of advertising.
But Google can use the potential of YouTube TV to sign several long-term contracts. Currently, YouTube TV has more than 5 million subscribers. It is one of the largest virtual distributors of multi-channel video programs. The parent company can use the potential of its video service to enter the valuable premium advertising and connected TV markets. Google’s advertising technology can dynamically insert ads into TV streams. This technology by other publishers was cooperating with Google to fill the advertising resources of their linear networks, streaming services, and digital resources.
Current trends in the video content market suggest consolidation, and consolidated companies have the opportunity for more aggressive negotiations to obtain a favorable price. On the other hand, large distributors can resist this pressure. With growing viewers, YouTube TV can provide significant value in the advertising industry. That is, on the one hand, YouTube can receive lucrative contracts as a channel with a large number of subscribers. On the other hand, Google can use YouTube to expand cooperation with advertising providers.
