Dive Brief:
- Google’s YouTube grew ad revenue 15.5% year-over-year in Q4 to $9.2 billion, per an earnings statement from parent Alphabet, a sign that appetites for premium formats like video are on the rebound. The company’s overall ad revenue for the period hit $65.5 billion, an 11% YoY increase.
- Search and other, Google’s largest segment, was up 12.7% YoY to $48 billion for the key holiday window. The tech giant continues to work on implementing a Search Generative Experience (SGE) powered by generative artificial intelligence (AI) that it views as transformational for the business.
- Another area highlighted by executives was subscriptions, which drew $15 billion in revenue in 2023, up five times since 2019. YouTube has been a pillar of Google’s subscription strategy, with new additions, including NFL Sunday Ticket, attracting more users and advertisers.
Dive Insight:
A positive quarter for YouTube indicates brands are again loosening their purse strings and spending more on pricier ad formats like video. Industry forecasts have suggested ad spending is primed for a more positive run after a fallow 2022-23, bolstered by major cyclical events including the Summer Olympics and an election cycle.
While some individual segments performed well, Google missed Wall Street’s estimates on overall ad revenue, sending shares sharply down. The company’s network revenues dipped 2% YoY, reflecting a brutal moment for the digital publishing space.
Executives attributed YouTube’s Q4 gains to a mix of direct response and brand advertising while noting that monetization for Shorts, the platform’s answer to TikTok, continues to “progress nicely.” YouTube has yet to break out revenue figures for Shorts but is working on less interruptive ad formats and easier ways to make content, such as a YouTube Create app that leverages generative AI to help users put together glossy videos without a big studio budget.
Connected TV (CTV) remains YouTube’s fastest-growing channel, with NFL Sunday Ticket positioned as an accelerant for subscriber and brand interest. The platform’s first season hosting the pro football package brought in more than 90 upfront and scatter advertisers, including Unilever.
As with Shorts, refining CTV monetization is a top priority. YouTube has introduced more offerings tailored to the channel, including 30-second unskippable ads, pause experiences and the ability for viewers to send promotions they see on TV to their phones.
Search also grew at a healthy clip in Q4, with the retail vertical leading the way. Executives were peppered with questions about how SGE developments will impact the future of search, both in terms of the user experience and advertising, but leaders continued to position the tech as a win-win.
“SGE is creating new opportunities for us to improve commercial journeys for people by showing relevant ads alongside search results,” said Chief Business Officer Philipp Schindler during the analyst call.
