Why the change. The move is also a significant win for YouTube creators. Overlay ads are known to be less effective than other ad formats, such as pre-roll ads, which play before a video begins. As a result, creators often earn less revenue from overlay ads, despite their videos receiving a high number of views. By removing these ads, Google is creating an opportunity for creators to earn more revenue from other ad formats, ultimately benefiting the YouTube creator community.

Increased competition and pressure. This announcement comes at a time when YouTube is facing intense competition from other video-sharing platforms such as TikTok and Instagram. These platforms have gained popularity, especially among younger audiences, with their short-form videos and algorithmic content discovery features. By enhancing the viewing experience on its platform, YouTube is ensuring that it remains competitive and continues to attract viewers and creators alike.

What YouTube says.

“Starting on April 6th, 2023, the “Overlay ads” ad format will no longer appear on YouTube to help improve the viewer experience and shift engagement to higher performing ad formats on desktop and mobile devices. Overlay ads are a legacy ad format that only served on desktop and are disruptive for viewers. We expect to see limited impact for most Creators as engagement shifts to other ad formats.”

Why we care. Advertisers who rely on this ad format may be affected by this move. Overlay ads are known for their affordability, making them a popular option for advertisers with smaller budgets. By removing them, Google is creating a gap in the market that may lead to increased competition and pricing for other ad formats. This may not be an issue for larger brands, but smaller businesses may struggle to compete for ad space on the platform.