YouTube Reports 49% Jump in Ad Revenue as Video Consumption Behaviors Evolve

As digital consumption behaviors evolve, and new habits become embedded, traditional advertising approaches are also being completely transformed – and in many cases, flipped on their head.

The latest big shift in this respect is now emerging, with YouTube gradually eating further into TV ad revenues, as it becomes the preferred consumption surface for video content in a broader cohort of consumers.

This week, YouTube’s parent company Alphabet reported its Q1 2021 results, which showed that YouTube brought in $6 billion in ad revenue for the period, up 49% year-on-year. That’s a huge result, which now puts YouTube on pace to beat digital video rival Netflix in annual earnings. 

The numbers reflect YouTube’s growing presence in the video landscape, which is now reaching beyond the digital realm, as people increasingly watch YouTube content on their home TV sets.

Last month, YouTube’s YouTube’s chief product officer Neal Mohan provided some new insight on this shift, noting that:

“Though mobile still makes up the largest percentage of how content is consumed on the platform, our fastest growing viewing experience is on the TV screen. Last December, over 120 million people in the U.S. streamed YouTube or YouTube TV on their TV screens. And there’s another interesting viewing behavior emerging. A new generation of viewers chooses to watch YouTube primarily on the TV screen: Also in December, over a quarter of logged-in YouTube CTV viewers in the U.S. watched content almost exclusively on the TV screen.”

As younger audiences, in particular, become more accustomed to connected TV viewing, YouTube is slowly eclipsing traditional TV channels, which points to new opportunities for advertisers to reach these increasingly important audiences through more affordable, more targeted, and more effective promotional campaigns.

Which is good news for brands and marketers, but as CNBC notes, it’s not so great for TV channels: 

“Regardless of who ends up ahead between YouTube and Netflix, both are stealing attention and dollars from traditional linear TV.”

The shift, however, is reflective of the evolving consumer landscape – and again, the way in which people are now choosing to engage with video content. The new video shift is increasingly aligned with on-demand, always available content. And as the next generation emerges, it’s also more aligned with shorter episodes and clips.

Which, again, significantly alters the landscape. 

As per Google SVP Philipp Schindler:

“Historical approaches to reaching audiences through, let’s just say, call it, linear TV don’t really work anymore. Advertisers are using YouTube now to reach the audiences they can’t find anywhere else. And remember, more 18-to-49-year-olds are actually watching YouTube than all linear TV combined. And brands are also seeing more incremental reach on YouTube compared to TV.”

If you’re ever watching promos for regular TV shows and wondering why the programming seems increasingly aligned with older consumers, this is why. Evolving video consumption behaviors see younger viewers moving further and further away from ”old school’ TV, and more towards connected viewing. Your kids likely idolize YouTubers more than they do TV presenters or actors, and while that may seem like a small thing, in the broader scheme, that’s largely reflective of the broader shift.

And that will impact media buying for decades to come, which is important to note in your own planning and process.

In other YouTube notes, Alphabet also reported that YouTube’s TikTok clone ‘Shorts’ is now up to 6.5 billion daily views, rising from 3.5 billion at the end of 2020.

YouTube Shorts

That points to significant opportunity for the option, which is still in its early phase. YouTube launched Shorts in the US last month, after first rolling it out in India in September last year.

In terms of ad specifics, Alphabet also reported that it’s seeing “great momentum” with TrueView for Action ads on YouTube, with the number of advertisers using the format doubling over the past year. 

Alphabet also pointed to emerging eCommerce opportunities on YouTube as a key focus moving forward: 

“People already, as you know, go to YouTube to decide what they want to buy. And we want to make it easier for them to buy and make the discovery process overall a lot easier.”

With over 2 billion monthly logged-in users, and over a billion hours of video watched every day, YouTube remains the digital video leader – which is now, slowly, becoming the video leader overall, catering to a much wider range of consumption behaviors. 

This is important for marketers to note, while the shift in the ad landscape as a result will be felt for years to come.

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