[비즈한국] A document presumed to be the YouTube advertising rate card for former civil servant Kim Seon-tae, known as 'Chungju-man', has become a hot topic (related article: 'Who Will Be the First Advertiser for PR-man Kim Seon-tae?'). While its authenticity remains unconfirmed, the branded content package price listed in the document reached up to 100 million won. Responses from public relations officials at large corporations suggest that "considering he is a 1-million-subscriber YouTuber, 100 million won is actually a reasonable price." However, there is a common sentiment being shared: the 'limitations of YouTube advertising' are becoming clear, as investing hundreds of millions in marketing budgets on YouTube does not necessarily lead to actual sales.
'Exposure' Is Guaranteed, but 'Purchases' Are Uncertain
The biggest advantages of YouTube advertising were its overwhelming 'impact' and its ability to 'reach target audiences.' Due to the nature of the YouTube market, where age groups and gender demographics are segmented by channel, companies were able to reliably promote their brands or products to the desired customer base. In particular, product placement (PPL), where cast members naturally explain a product mid-video, had the advantage of being accepted without resistance by consumers who want to support that channel.
The unit prices in the YouTube market, which companies scrambled to 'promote' on, rose naturally. For channels with over 1 million subscribers, it was common for a single promotion to cost over 100 million won. A marketing manager at a large corporation explained, "I thought the 100 million won marketing cost for former civil servant Kim Seon-tae, a 1-million-subscriber channel, was quite cheap," adding, "Usually, you need to pay around 150 million won for exposure on channels with over 1 million subscribers. Especially in the case of former civil servant Kim Seon-tae, he can add creative ideas, so it would likely be attractive from a corporate perspective."
However, the general consensus from companies regarding YouTube channels is that satisfaction with advertising effectiveness is 'not high.' Especially for startups or small and medium-sized enterprises (SMEs) that often lack sufficient promotional budgets, it is effectively difficult to advertise on channels with over 300,000 subscribers. Even with exposure through PPL, there are reactions that the effect leading to actual purchases is low.
The skeptical view is that while YouTube ads can serve as a digital billboard to increase brand awareness, they have limitations as a sales counter that actually gets people to open their wallets. A PR executive at a platform company assessed, "We did marketing to promote our corporate brand by spending large amounts of money on various YouTube channels, and we also did PPL integrated into payment methods, but we couldn't confirm any indicators that sales had increased in a meaningful way," adding, "Since the promotional cost is so high, we had high expectations at first, but now we are disappointed with the 'YouTube advertising effect'."
After TV Ads, YouTube—What Comes After YouTube?
As a result, advertising methods that are cheaper and have much lower barriers to entry, such as Instagram, are being mentioned as alternatives. Companies are turning their eyes to cost-effective 'advertising channels' that have higher shareability than one flashy video and can actually lead to purchases.
In reality, Instagram Reels ads can be executed for as little as a few million won, or at most tens of millions. In particular, as AI-based targeting technology has become more sophisticated, ads can be exposed to potential consumers who have records of searching for similar products. Furthermore, in the case of Instagram, the 'consumption pattern' of immediately clicking the 'Buy' button is natural.
The aforementioned platform PR executive explained, "In the case of Instagram, saves and sharing with friends and family via direct messages (DM) are much more active than on YouTube, so the rate that leads to 'actual purchase decisions' is higher, making it the most cost-effective promotional tool from the advertiser's perspective," adding, "Because Instagram can expose ads to potential customers through AI algorithms even without celebrities, advertising on ten Instagram accounts is far more effective for sales than advertising in one YouTube video."
The previous large corporation marketing manager also added, "If YouTube channels gained attention as skepticism toward TV advertising effects grew, now the pros and cons of YouTube channels have been thoroughly analyzed," and "While the advertising market will continue to grow as YouTube users' viewing time keeps increasing, it seems to be a time when companies need a fresh approach because competition has become just as fierce."