Maduran, Surya, and Ezhil made their way midday to an isolated spot near their houses in Thanjavur to record the video. As usual, one of them had written the message emailed to them on a chart paper. Then, they got down to doing their signature ‘jungle dance’ before a mobile phone camera. Maduran and Ezhil were bare-bodied and in green loincloth-like attire with a green Christmas decoration around their necks. The shoot over, they went back home happy that they’d get $5 (about Rs 325) for the video commissioned to them on a freelance website.
Little did they know their world would explode in their faces.
“We didn’t know what it really meant,” says Maduran, 20, in a phone interview of what he and his friends wrote on the makeshift banner: DEATH TO ALL JEWS. It only took a few hours since the video went live on January 11, 2017 for all hell to break loose. Four days later, the trio was in front of the camera again, recording an apology.
The anti-semitic video by the Thanjavur boys is the defining moment in a series of events now dubbed as the ‘adpocalypse’ on YouTube. At stake is the reputation of YouTube and billions of dollars in video advertising that the Google company and rival vacuum every year.
At the centre of it all is YouTube’s most popular star Felix Kjellberg alias Pewdiepie. For those who aren’t familiar with him, here’s a quick recap: Maduran, Surya and Ezhil are known as Funny Guys on Fiverr, a freelancer marketplace where people pay $5 for services. You could buy social media followers, get your homework done, or even get someone to make prank calls. Funny Guys had offered to paint a message on a banner and do a dance number to post on YouTube.
Kjellberg is YouTube’s biggest star with over 60 million followers who are mostly young adults. The Swedish gamer and video star said one day that he could get anything done on the internet for $5. To prove his point, he went on to Fiverr and contracted people to do a bunch of tasks for laughs. He asked the Funny Guys, who until then had delivered Happy Birthday messages, to paint “Death to all Jews” on a banner and do their dance.
This was all in jest until the Wall Street Journal asked The Walt Disney Company, with whom Kjellberg had a joint venture, for a comment on the anti-semitic video. Mid-February, Disney killed the joint venture. To be sure, Kjellberg’s videos weren’t the biggest reason for the adpocalypse. Hundreds of advertisers had already pulled out of YouTube because they found their ads running alongside inappropriate content like extremist videos or child abuse.
It started with the UK government pulling out ads from YouTube following an investigation by The Times that said ads by reputed brands like Mercedes Benz and Marie Curie and the UK government were running on top of pro-Nazi videos or videos from ISIS and Al-Qaeda supporters. Advertisers continued to pull out of YouTube, sending a clear message to the video network: clean up or lose money.
As much as $20 billion will leave the duopoly and head back to the quality end of the market over the next three years, Ricky Sutton, a war correspondent turned video entrepreneur, told FactorDaily. The duopoly he refers to is Google and Facebook. “This creates an opportunity for the public, publishers, broadcasters and advertisers,” says Sutton, the founder of Oovvuu, an artificial intelligence-powered video platform for publishers.
In India, Google executives were gung-ho about YouTube’s prospects as data became cheaper and the demand for streaming video shot up in 2017. When he takes to the stage, Google’s Rajan Anandan makes it a point to talk about how watch time has grown nearly 400% year on year, helped along by cheap and fast data from Reliance Jio, launched in September 2016. YouTube even launched offline features and also a new standalone app, YouTube Go, to reach the rest of India that had trouble with connectivity. With over 225 million users watching YouTube videos – globally, 1.5 billion do – on a smartphone every month in India, it was time to cash in on advertising.
Most big spenders in India are global brands and they tend to behave similarly across markets. For YouTube which saw brands like P&G cut down on ad spend during the adpocalypse, the worry in India is whether Hindustan Unilever and others would do something similar. “Most brands that spend in India are global brands and many times advertising decisions are passed on to the local teams,” says Subrat Kar, the founder of video analytics company Vidooly.
The brand safety crisis has presented competing streaming video companies with a shot at winning over advertisers. Across the board, from media buyers to executives running video streaming sites, there’s a new found aggression in wooing advertisers.
“People want trusted video and lots of it. Publishers have the audience and broadcasters have the video, and advertisers want the brand safety, engagement and scale they can provide,” says Oovvuu’s Sutton, who says he has met dozens of C-level executives in India last year.
The biggest over the top video players – Hotstar, Voot, SonyLiv and JioPlay are seeing gains from YouTube’s troubles. “In the last 12-18 months, we’ve seen many big brands move to OTT platforms. Primarily, it’s because of brand safety and viewability. The added piece that comes in is the ability to target,” says Uday Sodhi, who runs SonyLiv and heads digital for Sony Pictures Networks India.
SonyLiv has a reach of about 20-25 million monthly active users and an array of sports and Indian television shows. “Advertisers are concerned where these ads are showing… have relooked at ads and said we want platforms that are high viewability,” said Sodhi.
SonyLiv’s selling point is that its content is mostly certified films, television content made for mass audience and sports, that brands already like.
“Say I’m Horlicks, I never want to see my ad against adult content. This is a very serious concern,” says Kar. Fast moving consumer goods companies are the biggest spenders (60-70%) on digital video ads.
As per Vidooly’s estimates, advertisers spent close to Rs 1,700 crore on digital video ads in 2017 and are likely to spend nearly 30% more this year: some Rs 2,200 crore. Of last year’s number, about Rs 900 crore to Rs 1,100 crore was spent on YouTube and the rest was split between Hotstar, Facebook and others. Hotstar, owned by Rupert Murdoch-controlled broadcaster Star India, is estimated to have raked in about Rs 370 crore in advertising revenue in 2017.
That’s only a sliver of total advertising spend lavished mostly on television and print media in India. Total ad spend is about Rs 52,820 crore and is set to rise to Rs 107,810 crore by 2021, according to KPMG India- FICCI Indian Media and Entertainment Industry Report 2017 (pdf).
Voot, owned by Viacom18, has 32 million monthly active users and six million daily active users who watch about 50 minutes of video on the platform on an average. In 2017, the year the adpocalypse played out, Voot grew the number of advertisers from 100 to 350. This year, the company plans to launch its subscription business, go global, and improve its viewership, says Gaurav Gandhi, COO at Viacom18 Media. “Voot offers a highly engaged and totally safe environment for advertising,” he says. From a brand safety point of view, this is a much safer option compared to advertising alongside user-generated content on YouTube and Facebook.
Hotstar, with nearly 100 million monthly active users, is also gearing up to get a bigger share of the advertising market. In September, Star India outbid rivals including Amazon, Facebook, and Sony Pictures and acquired five-year exclusive rights to telecast the Indian Premier League for a stunning Rs 16,347 crore. As per reports, it has beefed up its ad sales team and is targeting revenues of nearly Rs 1,800 crore from IPL 11 and Hotstar is expected to bring in close to Rs 300 crore from the season.
The company’s LinkedIn profile shows that it’s hiring for dozens or roles – from a data scientist to an agency lead. It recently started an outdoor campaign in Bengaluru to hire software developers and technologists. The company also has plans to launch Hotstar in international markets.
Hotstar has over 500 advertisers. “Over the last 20-30 years, a lot of great brands have been built on television. There is a reason why this happened. Consumers were paying attention,” says Ajit Mohan, the CEO of Hotstar. “In the shift from television to digital in other markets, what was gained was better audience understanding and sharper segmentation of consumers. What was lost, unfortunately, was users who were actually paying attention.” A platform like Hotstar brings the best of both worlds, he suggests.
Meanwhile, media buying agencies have also been advising their clients to spend on other platforms as they turn wary of YouTube’s monopoly. “Media buying divisions of the agencies are also getting threatened because Google has trained an army of digital media marketers facilitating in-house media buying for big brands,” said Sree Sivanandan, the founder of Networkonomy Ventures, a network of investors, technologists and entrepreneurs in the media space. Many brands have hired in-house digital marketing teams to drive advertising. Take, for instance, the case of Flyrobe: it built up its 65,000 Instagram followers without external help. “We might work with agencies for scale in the future but so far we’ve been able to do everything on our own,” says Shreya Mishra, co-founder, Flyrobe.
The company, which targets millennials, works with hundreds of influencers to promote the idea that you don’t need to own expensive dresses when you can rent them. Mishra, however, is careful who the company works with. “The influencers in India are mostly credible. We don’t have many of them making extreme videos like in China.”
Despite the setbacks, YouTube’s dominance will not be easy to overturn. For one, the company is quick to react to advertisers concerns and secondly, its reach is way beyond what competitors can offer and, thirdly, its technological prowess is such that it can quickly detect and scrap problematic videos.
YouTube has reviewed its guidelines for creators twice – once in April 2017 and then in January this year. First, it said channels needed 10,000 lifetime views to be able to run ads. Earlier this month, YouTube said creators needed 1,000 subscribers and 4,000 hours of watch time within the past 12 months to be eligible for ads: tightening the terms to be able to get ad revenues.
“It is basically a very rigorous approach from our side to make sure that there are no bad actors on the platform,” says Satya Raghavan, head of entertainment content, YouTube.
This move has enraged newer content creators, who now have to work harder to be able to monetise their videos. “We’ve had to suffer because big creators screwed up,” said a creator, who requested anonymity fearing that YouTube might penalise him. But he said he’ll continue to make videos on YouTube because the network is so big.
YouTube’s reach is formidable. The video network now has over 1.5 billion users who spend 60 minutes a day on mobile, the company said recently. In India, YouTube claims to have about 225 million people watching YouTube on their smartphones every month. It also has 200 channels that have over 1 million subscribers and 4,000 creators with over 100,000 subscribers in India.
Google’s top executives also defended YouTube in its third-quarter earnings call, attributing $27.5 billion revenues it pulled in part to YouTube’s “strong performance,” and search.
Responding to an analyst’s question on brand safety, Alphabet CFO Ruth Porat said that the company has been doing the “right things” for advertisers and content creators and that the “overwhelming majority of advertisers never left, and those who did, many are already back on the platform.” More details are not available.
In June 2017, YouTube deployed its machine learning algorithms to trawl through videos. By the end of 2017, the company said its algorithms had weeded out over 150,000 videos for violent extremism that would have taken 180,000 humans 40 hours a week to flag. It also promised to have nearly 10,000 humans to fix policy violations on YouTube.
Back in Thanjavur, the three Funny Guys have bought a Canon 60D camera and started their own channel on YouTube in the hopes that the internet will have a place for them. “After studies, we plan to do full-time YouTube and Fiverr,” says Maduran.
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Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.