With web users watching billions of hours of video every month (Contently), YouTube has long established itself as an essential marketing channel, outperforming traditional TV advertisements in terms of targeting, reach and ROI.

The key to its success lies in its delivery of great content through content creators, backed up by a mature ecosystem of ads. That system is facing serious challenges though; the steady rise of ad blockers has made it much more difficult to reach audiences via video.

Ad blocking and the decline of viewability

Last year, Pagefair and Adobe reported a growth of 41% in ad blocking extensions, amounting the total active user-base of ad blockers to 198 million. Even YouTube’s largest star – Pewdiepie – confirmed that four out of 10 of his viewers are using ad blocking extensions (Adweek). In other words, content creators on YouTube are effectively losing about 40% of their potential ad income, while advertisers at the same time are not reaching 40% of their target group.

Unsurprisingly, this is driving content creators to look for new sources of revenue and forcing advertisers to find alternatives to effectively reach their audience.

Subscription-based video streaming

As a direct response to ad blockers, the industry is seeing developments into paid subscription models for online video. Last year’s announcement of Vessel, introduced a monthly video subscription service featuring some of YouTube’s biggest stars, such as Rhett & Link and Machinima. YouTube followed up not too much later with its own announcement of YouTube Red. Both subscription plans are claiming to provide a higher CPM for video creators (MediaKix), while charging viewers a monthly fee in exchange for ad-free viewing and exclusive content.

As both services are ad-free – only for paying subscribers – advertisers have no option but to go elsewhere or work with content creators directly. Fortunately, both services are still in their baby shoes and the majority of viewers still resides on their ad-funded counterparts.

A mutual solution 

So how did content creators and advertisers solve their mutual problem? For one thing they looked at one another in the form of brand collaborations for sponsored videos. Advertisers struggling to fully reach their desired audience through YouTube ads, could hereby effectively stand in the heart of the content. And the best part is: it works. With video creators endorsing brands in native YouTube videos, advertisers are seeing an increase in brand perception and higher click-through rates compared to traditional ad channels.

The reason for this success is largely thanks to the strong bond that YouTube creators tend to have with their community and fanbase. According to a study by Nielsen, 83% of people say they trust the recommendations of friends and family. YouTube stars ride on this familiarity, causing their endorsements  on products and services to carry heavy influence amongst their viewers.

Challenges of working with YouTube talent

Working directly with content creators doesn’t come without its share of challenges though. The first one is connecting your brand to the right influencers. With over 500 million channels to choose from, finding the right influencer as your brand advocate requires knowledge, effort and time. The easiest way to overcome this challenge would be to collaborate with an influencer marketing agency. Preferably one that has reliable contacts and established expertise in the market. Advertisers looking to keep their social media efforts in house, are highly recommended to use a YouTube statistics tool that provides information on the different types of channels.

Managing YouTube campaigns

Always keep in mind that traditional PR outreach and YouTube influencer collaborations differ greatly, especially in terms of professionalism. Social media stars generally are young of age having started their channel purely as a hobby. Most live normal daily lives with busy schedules, so expect response times to vary significantly. Therefore executing a YouTube campaign with multiple influencers can be particularly challenging. Tying content creators to reasonable expectations and requirements grants advertisers a safety net in case things go sideways.

Goal alignment

Furthermore, influencer marketing is – in most cases – not a performance marketing channel. While there are several ways to track KPIs of campaigns on platforms such as YouTube or Twitch, traditional attribution models fail to underline the value of brand visibility on YouTube. Marketers going in with the wrong expectations will come out disappointed. Aligning goals between the influencer and the advertiser goes a long way to make sure that campaign targets are being reached.

Working with influencers

Keep it authentic. Advertisers sometimes have the tendency to dictate how YouTubers should incorporate the brand and what they should say about it. While this is understandable to a certain degree, robbing the creator of their creativity and authenticity does much more harm than good. It is important to come to a mutual understanding and align goals.

What about influencer marketing agencies?

Online marketing agencies are playing into the potential and challenges facing advertisers. Most offer either pure influencer marketing services as a creative agency, whereas others opt for the more scaleable approach of building self-service influencer marketing platforms. Both have their appeal and value in the market.

So, should marketers forsake YouTube ads altogether?

No. Even though the YouTube ad ecosystem is under pressure, there still lies great potential for advertisers to reach their audience. Working with content creators directly offers a strong alternative to gain visibility on the platform and should be tied into the content marketing strategy of every modern brand.

By standing at the source of YouTube’s success – its content – video marketers will remain able to benefit from YouTube as a marketing channel, despite the challenges of its advertising ecosystem.