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YouTube Has $7 Billion In Ad Sales - That's Premium Video

by Wayne Friedman , Staff Writer, July 29, 2021

Can anyone make a case for somewhat “average” premium streaming TV-video content? You might if you consider that YouTube is in that category.

While YouTube has diversified to include all kinds of video -- user-generated, instructional, unscripted -- and yes, some premium video content -- perhaps the popular video descriptor should adjust.

But what isn’t average is the amount YouTube pulls from advertising.

In its second-quarter reporting period, YouTube took in a massive $7 billion -- up 84% versus a year ago (during a pandemic period), and 35% versus the first quarter this year. We're talking about a three-month period.

For sure, Google’s wide-ranging digital media business, which seemingly has ties to virtually every corner of digital media, is helping these results. It is still an astounding number.

Perhaps even more astonishing is how much YouTube gives back to creators, artists and even big media organizations: $30 billion over the past three years. That comes out to around $10 billion a year in paying for content.

What’s the context here? If you think Netflix’s $15 billion per year for high-quality original/licensed TV and movie content is a big deal, look at what YouTube pays: $10 billion a year.

Back to advertising. Now trending at $7 billion a quarter, YouTube could conceivably trend to yield anywhere from $25 billion to $30 billion a year in video advertising -- largely coming from direct-response marketers, according to reports.

And we know Google overall still has its eye on big brand TV advertisers, which comprise a healthy portion of the traditional $70 billion TV ad business.

The world of ad-supported streaming and digital needs to consider the bigger picture of competitors -- all in their own boxes. Think Paramount+, Peacock and the ad options of HBO Max in one. Maybe Hulu, YouTube TV, and Sling TV in another -- and Roku and Amazon Fire TV, the box for TV streaming app distributors. And how about Pluto TV and Tubi? Lots of boxes.

Digital video businesses could take their own advertising-financial angle for being attached to video content.

But in an ever-growing age of audience targeting, which has swamped those old-school video buyers looking at just high viewing of individual TV programs/content, there’s a lot to consider.

Keep looking in those boxes.

advertising, content creators, direct response, google, performance marketing, search, streaming, tv, video, youtube

2 comments about "YouTube Has $7 Billion In Ad Sales - That's Premium Video".

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Ed Papazian from Media Dynamics Inc, July 29, 2021 at 12:02 p.m.
Wayne, YouTube isn't going to make much headway with TV branding advertisers until it gets lots of content of comparable quality to what the TV networks and cable channels offer and until it can place 15- and 30- second commercials in situations where they not only run from start to finish but are also seen at least to the same extent as on "linear TV". Presenting lots of old Sfi-Fi Channel movies is a first step in this direction as well as other films that now carry ads---but this is only a start. I use an ad blocker so when I watch one of these ad-carrying movies I see no commercials. How many other "viewers" do the same thing? And you can't rely only on movies---what about other types of professionally produced fare---dramas, sitcoms, reality, newsmags,game shows, etc.

Anyway you figure it, YouTube will have to use Nielsen to verify its audience delivery as I doubt that many branding advertisers will accept its first party data. And selling TV branding advertisers will require experienced TV sales types with good connections to the time buying community as well as skilled packagers, researchers, etc. All of that will take time and lots of effort---we're not talking programmatic here.
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John Grono from GAP Research, July 29, 2021 at 10:09 p.m.

Tagging your ad and getting verified delivery (and duration) is about as good as you can get at the moment. Attempts can be made to estimate or impute the profile and demographics, but I'd initially focus on selecting the sites that the ad will be viewed on.