YouTube has steadily been taking users away from traditional TV and brought them to the web to watch all sorts of videos that are available on YouTube. The company even announced YouTube Red which is a subscription-based service that gives users an ad-free experience, but also gives users exclusive content that you don't get with regular YouTube. With YouTube Red, some of the larger YouTube stars got paired with some Hollywood directors for feature-films. It really shows that YouTube wants to compete with traditional TV for not only the cordcutters, but also those that want to get rid of their cable or satellite TV. And it looks like YouTube is continuing to move in that direction.
According to a report that surfaced this morning and was later confirmed, Magna Global – which is an ad-buying firm that typically buys ads on TV networks – has moved about $200 million of their potential ads from TV networks to YouTube. Over the next five quarters, the firm is slated to spend $250 million in ads on YouTube. Magna Global stated in their statement that this agreement (which is for three years) is the "largest Google Preferred deal ever signed". For those that may not have heard of "Google Preferred", it's a service that launched two years ago and allows advertisers to reserve spots for ads on videos from the top 5% of YouTube's channels. Magna Global has clients like Coca-Cola, Sony, Fiat Chrysler Automobiles – FCA, CVS and even Johnson & Johnson (all of who spend a boat load on advertising, as they are huge companies), all told, they manage around $37 billion in marketing.
This is a big deal for YouTube and should definitely put the TV industry on notice, that they are part of something that's being slowly phased out. Many TV networks make their money from ads. With Magna Global moving $200 million this year and $250 million over the next five quarters, on over to YouTube, it's not good news for many TV executives out there. Magna Global and other ad-buying firms are going to be looking towards YouTube and even Netflix or Hulu, for targeting the young people (18-25 year olds) demographic, as that is where they all are.