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A new YouTube feature will make its connected TV ads more shoppable

YouTube today gave advertisers a sneak peek at its plans to make its video platform more shoppable. The company will soon be introducing a new interactive feature aimed at advertisers called brand extensions, which will allow YouTube viewers to learn more about a product they see on the screen with a click of a button.

The new ad format will allow the advertiser to highlight their website link or another call-to-action in their connected TV video ad. The viewer can then click the option “send to phone,” which then sends that promotion or URL directly to their mobile device, without interrupting their viewing experience.

From the mobile device, the consumer could then shop the website as they would normally — browsing products, adding items to the cart, and completing the transaction. But they can do it when they’re ready to engage with that product information, instead of having to stop their video to do so.

The advertisers will also be able to smartly target the ads to the correct audience, based on the video content. For example, a fitness video may feature a brand extension ad that shows a new pair of running shoes.

Advertisers will be able to measure the conversions generated by these brand extensions directly in Google Ads, YouTube says.

In a related e-commerce ad effort, brands can now also add browsable product images to their direct response video ads, in order to encourage interested shoppers to click to visit their website or app.

These are only a few of the efforts YouTube has been working on with the goal of expand further into e-commerce.

Consumers, and particularly younger Gen Z users, today like to watch videos and engage while they shop, leading to the emergence of numerous video shopping services — like Popshop Live, NTWRK, ShopShops, TalkShopLive, Bambuser, and others. Facebook has also invested in live shopping and video-based shopping across both Facebook and Instagram.

Meanwhile, TikTok has become a home to video-based e-commerce, with Walmart (which also tried to acquire a stake in the app when Trump was trying to force a sale) hosting multiple shopping livestreams in recent months. TikTok also found success with e-commerce as it has rolled out more tools to direct video viewers to websites through integrated links and integrations with Shopify, for example.

But YouTube still has a sizable potential audience for video shopping, as it represents 40% of watch time of all ad-supported streaming services, per Comscore data. And of the top five streaming services in the U.S. that account for 80% of the connected TV market, only two are ad-supported, YouTube noted.

Ads are only one way YouTube will drive e-commerce traffic. Creators will also play a role.

A report from Bloomberg this past fall said YouTube was asking creators to tag and track the products they were featuring in their clips. YouTube later revealed more about this effort in February, saying it was beta testing a shopping experience that lets viewers shop from their favorite creators, and that this would roll out more broadly in 2021.

Brand extensions are separate from that effort, however, as they’re focused on giving the advertiser their own means to drive a shopping experience from a video.

YouTube says the new brand extensions ads are only the first of more interactive features the company has in store. The feature will roll out globally later this year.

Epic Games buys artist community ArtStation, drops commissions to 12%

One the same day as Fortnite maker Epic Games goes to trial with one of the biggest legal challenges to the App Store’s business model to date, it has simultaneously announced the acquisition of the artist portfolio community ArtStation — and immediately lowered the commissions on sales. Now standard creators on ArtStation will see the same 12% commission rate found in Epic’s own Games Store for PCs, instead of the 30% it was before. This reduced rate is meant to serve as an example the wider community as to what a “reasonable” commission should look like. This could become a point of comparison with the Apple App Store’s 30% commission for larger developers like Epic as the court case proceeds.

ArtStation today offers a place for creators across gaming, media, and entertainment to showcase their work and find new jobs. The company has had a long relationship with Epic Games, as many ArtStation creators work with Epic’s Unreal Engine. However, ArtStation has also been a home to 2D and 3D creators across verticals, including those who don’t work with Unreal Engine.

The acquisition won’t change that, the team says in its announcement. Instead, the deal will expand the opportunities for creators to monetize their work. Most notably, that involves the commission drop. For standard creators, the fees will drop from 30% to 12%. For Pro members (who pay $9.95/mo for a subscription), the commission goes even lower — from 20% to 8%. And for self-promoted sales, the fees will be just 5%. ArtEngine’s streaming video service, ArtStation Learning, will also be free for the rest of 2021, the company notes.

The slashed commission, however, is perhaps the most important change Epic is making to ArtStation because it gives Epic a specific example as to how it treats its own creator communities. It will likely reference the acquisition and the commission changes during its trial with Apple, along with its own Epic Games Store and its similarly low rate. Already, Epic’s move had prompted Microsoft to lower its cut on game sales, too, having recently announced a similar 30% to 12% drop.

In the trial, Epic Games will try to argue that Apple has a monopoly on the iOS app ecosystem and it abuses its market power to force developers to use Apple’s payment systems and pay it commissions on the sales and in-app purchases that flow through those systems. Epic Games, like several other larger app makers, would rather use its own payment systems to avoid the commission — or at the very least, be able to point users to a website where they can pay directly. But Apple doesn’t allow this, per its App Store guidelines.

Last year, Epic Games triggered Fortnite’s App Store expulsion by introducing a new direct way to pay on mobile devices which offered a steep discount. It was a calculated move. Both Apple and Google immediately banned the game for violating their respective app store policies, as a result. And then Epic sued.

While Epic’s fight is technically with both Apple and Google, it has focused more of its energy on the former because Android devices allow sideloading of apps (a means of installing apps directly), and Apple does not.

Meanwhile, Apple’s argument is that Epic Games agreed to Apple’s terms and guidelines and then purposefully violated them in an effort to get a special deal. But Apple says the guidelines apply to all developers equally, and Epic doesn’t get an exception here.

However, throughout the course of the U.S. antitrust investigations into big tech, it was discovered that Apple did, in fact, make special deals in the past. Emails shared by the House Judiciary Committee as a part of an investigation revealed that Apple had agreed to a 15% commission for Amazon’s Prime Video app at the start, when typically subscription video apps are 30% in year one, then 15% in year two and beyond. (Apple says Amazon simply qualified for a new program.) Plus, other older emails revealed Apple had several discussions about raising commissions even higher than 30%, indicating that Apple believed its commission rate had some flex.

Ahead of today’s acquisition by Epic Games, ArtStation received a “Megagrant” from Epic during the height of the pandemic to help it through an uncertain period. This could may have pushed the two companies to further discuss deeper ties going forward.

“Over the last seven years, we’ve worked hard to enable creators to showcase their work, connect with opportunities and make a living doing what they love,” said Leonard Teo, CEO and co-founder of ArtStation, in a statement. “As part of Epic, we will be able to advance this mission and give back to the community in ways that we weren’t able to on our own, while retaining the ArtStation name and spirit.”

How one founder made the most of Y Combinator in a pandemic year

This week, we welcome guest Hana Mohan to our podcast Found. Hana is the co-founder and CEO of MagicBell, a new startup she created with Josue Montano that just recently graduated from Y Combinator’s Winter 2021 cohort. MagicBell is a full-featured, plug-and-play notifications inbox aimed at developers who want to build one into their own product, but don’t want to have to build one themselves from scratch.

Hana’s experience as an entrepreneur spans multiple companies, including her last one which she grew to significant success in terms of annual revenue. She’s also a proud transgender woman, who underwent her transition mid-way through her existing history as a founder and entrepreneur. Hana talks to us about the challenges she faced taking on her transition in an industry where the focus is often exclusively on how hard you’re hustling and what you’re building next, and about her origin story as a founder coming from an environment where there weren’t necessarily many examples with similar life experience to look to for inspiration.

During our chat, Hana also shared lots of insight into YC, and what it provides founders, as well as perspective on what it was like going through the program during a global pandemic in a remote context. Finally, she offers some great context on finding your first investors and customers as a distributed team.

We loved talking to Hana, and we hope you love the episode. You can subscribe to Found in Apple Podcasts, on Spotify, on Google Podcasts or in your podcast app of choice. Definitely leave us a review and let us know what you think, or send us direct feedback either on Twitter or via email. Come back next week for yet another great conversation with a founder all about their own one-of-a-kind startup journey.