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Here's how YouTube can justify its higher ad prices (GOOGL, GOOG)

YouTube plans to raise ad prices for some of its premium inventory by as much as 20% starting in 2018

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YouTube plans to raise ad prices for some of its premium inventory by as much as 20% starting in 2018, according to sources familiar with the matter, perBusiness Insider.

Specifically, the price increases will affect YouTube’s “reserved inventory,which allows advertisers to guarantee prominent ad placement ahead of time, target specific audiences, and select the content their ads run next to. This inventory differs from ads bought in anauction, which are sold to the highest bidder and which brands can't control the placement of.

YouTube’s reported plan to raise its ad prices comes shortly after the company came under fire for a slew of brand safety issues. In late November, big brands including Deutsche Bank and Adidas pulled their YouTube ad campaigns after discovering their ads were running next to videos of young children that attracted sexually predatory comments. Other advertisers found that their ads were running next to objectionable content on Google Preferred, which was initially pitched as a close replica of TV advertising, Business Insiderreported earlier in November.

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Despite its brand safety issues, YouTube can justify its higher ad prices for a couple of reasons:

  • The company is making progress on its effort to crack down on objectionable content.
  • Vice
  • told
  • YouTube alone accounts for a sizable portion of over-the-top (OTT) hours.
  • comScore

Meanwhile, YouTube’s increasing ad prices represent the company’s latest goal of "premium-ifying" its top digital ad inventory. This gives YouTube a better shot at luring brands that are wary of the company’s brand safety issues and brands that are accustomed to the premium ad environments of traditional TV.

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