What’s YouTube’s Ad Revenue?

by Matthias Funk | | Category: YouTube Marketing

YouTube revealed its ad revenue for the first time. The company made over $15 billion from ads last year alone — up 36 percent from 2018 and 86 percent compared to 2017. The platform contributes roughly 10% to Google’s total revenue.

Curtains raised for YouTube’s ad revenue!

YouTube revealed for the first time what a huge advertising machine it is since the platform was bought by Google for 1.76 billion dollars in late 2006. Last year, in 2019 YouTube made over $15 billion from ads — that’s up 36 percent from 2018 and 86 percent compared to 2017.

What Is YouTube’s Ad Revenue 2019?

Google CEO Sundar Pichai reported that YouTube generated $15.1 billion in ad revenue in fiscal 2019. These numbers show that YouTube ads contribute roughly 10 percent to all Google revenue.

Those figures make YouTube’s ad business roughly one fifth the size of Facebook’s  (2019: $69 billion, +25%), and more than six times larger than all of Amazon-owned Twitch.

How much money did YouTube make in 2019

youtube ad revenues 2019 2018 2017 yoy

Alphabet CFO Ruth Porat said in a statement that YouTube sees “substantial continuing opportunity” with both direct-response advertisers, as well as brand ad campaigns.

Over the past two years, YouTube’s ad revenue grew by more than 35% each year.

YouTube ad revenue in 2020

YouTube revenues kept growing in the first quarter of 2020 in the midst of the Covid-19 pandemic. YouTube revenue jumped 33.5%. Chief Financial Officer Ruth Porat said YouTube brand advertising growth accelerated in the first two months of the quarter but started to experience headwinds in the middle of March. Direct response ads on YouTube, which often entice viewers into buying something, “continued to have substantial year-on-year growth throughout the entire quarter,” she added.

Is YouTube making a profit?

Google did not break out the profitability of YouTube in its 2019 earnings statement. You need to know that out of $15 billion ad revenues the majority goes to its creators. Although Porat wouldn’t say how much of the $15 billion goes to its content makers, she did specify those payouts belong to YouTube’s “content acquisition” costs, which run around $8.5 billion.

The last somewhat reliable info on YouTube’s profit is already 5 years old. In 2015 some unnamed person at Google reportedly said to the Wall Street Journal that YouTube is “roughly break-even.

Many things have changed since then. Despite the huge content acquisition and infrastructure costs YouTube probably is profitable by 2019 with $15 billion revenues and an estimated 4,000 employees.

How Many Subscribers Does YouTube Premium Have?

But not only YouTube’s ad revenue is growing strong. YouTube’s subscription business is too. YouTube’s TV streaming bundle now has more than two million subscribers. YouTube Music and YouTube Premium even have more than 20 million paid subscribers. For comparison:

YouTube’s subscription revenue now has a $3 billion annual run rate and the company, led by CEO Susan Wojcicki, is committed to growing its subscription business.

The company is pushing hard on its subscription service so that users can access various third-party streaming sites from YouTube.  Similar to Apple TV and Amazon TV, users can then watch content from the likes of HBO, Cinemax and other streaming sites.

youtube premium

YouTube’s Business Model

YouTube’s video platform enables creators and brands to upload their videos. In 2020, more than 31 million YouTube channels are using YouTube to share videos. Every month more than 2 billion monthly unique users come to YouTube to be entertained, inspired, or educated.

When channel owners have enabled monetization, advertisers can place their ads in front of these videos. In the absence of paying customers, these ads cross-finance the vast infrastructure needed to support YouTube’s operations.

Data collected via YouTube is shared with Alphabet / Google, and vice-versa. This improves the effectiveness of advertising campaigns by the company or third parties.

youtube business model

YouTube’s platform features three key stakeholders:

  1. Users
  2. Creators or rights holders of copyrighted content, and
  3. Advertisers.

Reconciliation of stakeholder needs in this ecosystem or multi-sided market is a key challenge for YouTube.

While only around 10,000 YouTube videos generated over 1 billion views, there are billions of videos that have only been watched a handful of times. tubics helps brands leverage the power of YouTube videos with a data-driven video content strategy.

 

Author:
Matthias Funk Co-Founder of tubics