According to McKinsey's 2021 holiday survey, 57% of shoppers say that YouTube has influenced their buying decisions. That means you definitely want to use YouTube to reach customers and tell people about your brand. The only question is: what method of advertising should you use?
Sponsorship marketing and programmatic advertisements on YouTube both offer different advantages. While brands don’t necessarily have to stick to one strategy or the other, it is useful to understand what each of these methods have to offer when deciding how to boost their brand and spend their budget most wisely.
Here we’ve put together a guide breaking down the differences between sponsorship and programmatic advertising on YouTube.
Programmatic advertising is the automated buying and selling of digital advertising. Advertising this way allows for brands to buy ad space demographic targeting, which helps to direct their ads at a specific audience.
You’ve probably seen programmatic ads while surfing through YouTube: those preroll, banner ads, in-video ads are all examples of the different programmatic options that the platform offers.
On YouTube, you can buy programmatic ads through the Google Ads console. These ads can be scaled and optimized during the campaign, making this form of media buying relatively straightforward and low effort.
Sponsorship marketing has become hugely popular in recent years, particularly on YouTube. With this method, brands reach out to content creators and sponsor their videos, in exchange for an ad read promoting their brand which is integrated directly into the video.
Sponsorships allow brands to use YouTube channels to reach specific consumers who are likely to be more receptive to their message, often because they already like the influencer's content or agree with their opinions on various topics.
There is no centralized marketplace for purchasing sponsorships - brands often have to reach out to the creators directly or through and agency, and negotiate the terms of the agreement themselves.
The relationship with a creator from a programmatic perspective and a sponsorship perspective differs. While sponsorship is a direct relationship that often signals an endorsement of sorts, with programmatic advertising the brand has no relationship with the creator at all. Now, deciding which method is best for your brand often involves considering brand safety and which of these options will be a “safer bet” for protecting your brand image.
YouTube sponsorships typically work best when the fit between a brand and an influencer is natural. For sponsorship, there are things both sides need to take care of to make sure integration is successful. The brand needs to be super careful in selecting creators to sponsor, even if they use an agency to source creators. Some factors to consider are whether the channel owner fits well into the brand’s general niche, if they can authentically promote the brand’s product, and if those creators are a good fit as ambassadors for the brand.
However, even if all of those boxes have been ticked, there have been numerous examples in recent years of brands reneging on their sponsorship deals once creators face controversy that might reflect badly on the brand. Capitalizing on the goodwill and popularity of any creator also brings the potential risk of being associated with any more negative aspects of that creator’s reputation, if and when such controversies arise.
On the programmatic side, things are a bit different. As a brand, you won’t have any say on the channels your ads run through. Sure, you’ll be able to select specific demographics while setting up your campaign but you’re not able to select specific creators for your ads to be shown on. An ad will appear on a creator’s video not because they want it to but because the analytics fit the selected criteria for the intended audience. This can sometimes be an issue for brand safety, if the brand appears alongside content that doesn’t want to be associated with. For example, most brands do not want their ads to be featured on content that promotes racial prejudices or white supremacy (as well as not wanting their ad budget to go towards supporting this kind of content.)
When a programmatic advertisement runs on a specific channel there is no direct correlation between the brand and creator. That can often be a good thing because it allows brands to avoid the kinds of creator scandals that we mention above. So if you’re watching a “how-to” channel and you see a programmatic Grammarly ad pop up on your video, no one is going to think that creator is a direct ambassador for the brand. With programmatic ads, there is far more brand safety and minimal liability rather than working with sponsorship.
Setting up sponsorship campaigns on YouTube can often be laborious. The process involves sourcing tons of creators, vetting their channels, getting offers from as many people as possible, negotiating pricing for each ad, dealing with ‘creator egos’, and creating the perfect ad content for a seamless integration on each channel. This can be an extremely tiring process, and makes it one that is difficult to scale.
Since programmatic advertising completely skips the entire interaction between brand and creator, this method of advertising makes all of the above steps totally unnecessary. By selecting specific demographics that correlate with the audience you’re trying to reach you are able to skip all the frustrating steps of finding the best creators. That means that if a particular campaign is working, scaling it up is far easier with programmatic ad buying.
Pricing for sponsorship can become extremely arbitrary. There isn’t one single price list that all creators follow, making it far more difficult to find creators that have reasonable rates. There is minimal standardization within the industry, so there is a lot of negotiation involved.
This is in contrast to programmatic ad buying, where Google sets the CPM rate according to the scale and focus of your campaign, and does not offer any wiggle room.
One of the benefits of brands sponsoring content is the fact that you’re working with real people! It’s not about relying on an algorithm to do all the heavy lifting for you. Rather you get to see the full cycle of the first steps of engaging with a creator about a potential partnership to see it run on their YouTube channel. Another important aspect of working with a creator is if the relationship works well there is the flexibility of negotiating fair prices, getting good deals for bulk booking, and minimizing the risk of working with a flakey creator.
When it comes to targeting the proper audience there are certain things that need to be taken into consideration, as you target your audience you’re looking at their general interests, age group, and location. Although this sounds perfect on paper there are some issues that could potentially arise. You may be reaching the proper audience you wanted to reach, but catching them at the wrong time, when they are watching content totally unrelated to your ad. This wouldn’t do much harm to the brand but it would be counterproductive to the money they spent running the ad.
While sponsorships, on the other hand, have a different type of annoyance factor. Say you live in Europe but you’re watching a video from a creator in the US, there’s a chance the sponsor’s product isn’t sold in your country. So, why would you want to know about the sponsors - they have no relevance to your life.
Another common issue that comes up with brands sponsoring content is the authenticity of the creator. As a viewer, we look to these YouTubers for guidance on which products are the best to use. Personally, I know there is a moment when I question some of my favorite creators as I see the sponsorship that doesn’t fit well.
Although, this is not always the case. Take the ThoughtLeaders Agency, for example, it’s their job to help place brands we represent on the best possible channels for successful integrations.
Check out what Max Rochman had to say about a successful integration Fetch recently had with Matt Stonie -
“Fetch ran on Food Theorists in July and they were skeptical at first if this would work for them since it's a big buy (it's a big channel) and it would be an end-roll. But once we watched the integration we knew it was going to be great because they put so much work into the spot and it was really fun to watch and super relevant for their audience. Within a few weeks they had already hit their target CPA and every day it drops even lower since the channel is so evergreen.”
Although there were some moments of concern that the integration would not work well together, the content and the sponsorship fit each other well. From the content to the sponsorship it didn’t feel forced and unauthentic.
One of the hardest parts of a highly successful integration stems from the content itself. This is where ThoughtLeaders comes into play for making sure integrations are as well done as possible.
From the programmatic perspective this is where advertisements have seriously failed. The ads may be targeted to the right audience, however the timing is not correct. This is why ThoughtLeaders is in the process of bringing a new tool to market that makes programmatic advertising on YouTube far more strategic than ever before. That’s all I can say for now - but get in touch to learn more!