YouTube's office building in San Bruno, Calif. Photo by AP.
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YouTube Poses Rising Competition—for Publishers on YouTube

Photo: YouTube's office building in San Bruno, Calif. Photo by AP.

YouTube’s ad business is booming. But one group of YouTube program producers—media companies that sell their own ad spots on the platform—are finding the boom isn’t quite as bountiful.

The Google-owned video giant has become so adept at selling ad space through automated auctions that it is now massively underpricing those publishers that sell ad spots directly on their YouTube programs. One digital media executive told The Information that his firm is now selling as little as 10% to 15% of its YouTube ad space directly, down from as much as 40% three years ago. That’s because YouTube charges as little as a quarter what the publishers charge for spots they sell on their YouTube programs, the executive said.

While YouTube shares revenue from its ad sales with publishers, the money is far less than what publishers get from ad spots they sell directly. This trend is particularly hurting midsize media firms, such as Vice Media or BuzzFeed, which rely on video advertising sold on programs that stream on YouTube.

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