HK viewers turn to ad-free experience on YouTube: A missed opportunity for advertisers?

As YouTube ramps up its premium offerings such as the recent introduction of its AI feature and potential expansion of its plan offerings, it is seeing more subscribers from Hong Kong, indicating their preference to opt for an ad-free viewing experience.  

According to official data from Globalwebindex (GWI) collected throughout 2023, around one in six (16%) internet users in Hong Kong are YouTube Premium subscribers, which is higher than the global average of 12.7%.  

However, the customers who have subscribed to YouTube Premium tend to be younger, more affluent, and more brand-loyal. They are also more likely to discover new brands through digital advertising, which aligns with the customer profile that most brands aspire to reach, according to Chris Ngan, general manager, Hong Kong and Taiwan, The Trade Desk.  

For instance, Gen Z and Millennials account for 70% of YouTube Premium subscribers, a cohort that represents the high-value customers that brands and advertisers cannot afford to overlook, according to GWI.  

HK consumers opt for ad-free streaming experience 

This insight implies that brands may risk missing out on the opportunity to engage with these high-value customers and not be able to maximise the value of their advertising if they continue to invest heavily in YouTube advertising, added Ngan.  

On the other hand, young and digitally savvy consumers are used to being able to consume uninterrupted streaming services and may also be attracted to other features of the subscription, such as offline playback or access to YouTube Music, said Penelope Siraj, principal consultant, R3. 

The latest “Youngsters report” by OMD Hong Kong attributed YouTube Music’s popularity to its effective engagement with the audience through 30-second audio ads, enabling CPM bidding and optimised creative targeting for both music and non-music content using Google’s solutions. 

Despite increasing overall satisfaction with the platform, regular exposure to ad-free content can heighten the aversion to ads, making people ultimately less tolerant, said Leela Nair, managing director APAC, Ebiquity. 

“With no exposure to ads, the recall and recognition of brands advertised on the platform will decrease among Premium users and tolerance for ads will decline,” she added. 

A missed opportunity for advertisers in Hong Kong? 

Given the growth of YouTube Premium around the world and especially in Hong Kong, industry players MARKETING-INTERACTIVE spoke to agreed that advertisers have to step up their game and identify innovative ways to reach the untapped audience. 

In fact, the media landscape has evolved over the past decade due to the rise of open internet, where consumers are not limited to the “walled gardens” such as YouTube alone, but they are exposed to Connected TV, over-the-top, news websites and more. According to a report from The Trade Desk, the ratio of time consumers spent on the open internet compared to walled gardens is 59% to 41% in the Asia-Pacific region. 

As such, it is time for advertisers to reflect and consider shifting their advertising budget to the open internet and adopting an omnichannel strategy to best reach these valuable customers, said TTD’s Ngan.  

“In Hong Kong and globally, TTD has forged partnerships with many premium platforms, most recently with Netflix, aiming to assist brands and advertisers more accurately reaching their target audiences through the open internet and optimising their returns on investment,” he added. 

Alternatively, sponsorship of content or creation of highly engaging branded content that creates brand affinity or exclusive content not only provides brand exposure to an elusive audience but also provides value to the audience, said Ebiquity’s Nair.  

“We have found that our clients are also increasingly using other social platforms such as TikTok to reach the younger segmented audience.” 

Furthermore, brands may intensify efforts in influencer marketing and collaborate with creators to hardcode sponsored messages into video content, said R3’s Siraj.  

“Trying to recapture segments who migrate to Premium will entail planning that considers offline, contextual and influencer advertising.” 

As no single channel can effectively capture 100% of the target audience, Siraj said advertisers should identify and utilise complementary channels, “in this case, ideally those impervious to adblocking.” 

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