YouTube dominates TV viewing hours and TV ad revenues, but ad revenue growth has slowed, likely due to Amazon’s aggressive push into TV advertising and live sports. In other words, the battle for advertising dominance on the channel is getting more intense.
How fierce? Well, judging by last quarter’s performance, YouTube, sometimes considered the least talked about video company, may end up being its fiercest competitor.
YouTube’s advertising revenue fell to 13% in the second quarter from 21% in the first quarter, with Google blaming a slow start last year for its growth this year.
That’s true, but don’t ignore issues as big as Amazon. Amazon’s ad-supported Prime, which launched in January, has upended streaming ad pricing, as the video service’s massive subscriber base has put pressure on YouTube, Netflix and others to buy its ad inventory.
So YouTube has no choice but to tout its strengths through CEO letters and earnings calls, and the platform’s success speaks for itself. It may not have premium programming, but it has unmatched scale, extensive audience data, and content across genres and subcultures in one place. Plus, YouTube’s algorithm is unmatched at directing users to popular content.
Here’s today’s overview:
YouTube’s strong user base
One of the most obvious indicators of which platform is the most popular is the size of its user base. And in that race, YouTube has a huge lead over its competitors.
To date, YouTube has attracted more than 2 billion monthly active users (MAUs) on its platform, making it the second most visited site in the world after its parent company, Google, nearly half of the 5.44 billion people who use the internet worldwide.
By comparison, TikTok is privately held, but the entertainment app is expected to reach 1.5 billion monthly active users as of the end of 2023 and 1.8 billion by the end of 2024, according to Business of Apps. Meta also announced in its Q1 2024 earnings call that its family of apps had reached a total of 3.24 billion users.
Amazon Prime has more than 200 million subscribers worldwide, and Netflix announced in its Q2 2024 earnings report that it has 277.65 million paid streaming subscribers worldwide.
YouTube expands into CTV
As more money is pouring into CTV advertising, YouTube is capturing a significant share of that through YouTube TV. In a letter posted to the YouTube blog in February, the platform’s CEO Neal Mohan said that on average, viewers watch more than 1 billion hours of YouTube content on TV every day. In fact, Nielsen’s U.S. Streaming report hailed YouTube as the leader in streaming hours for 2023.
More broadly, U.S. CTV ad spending is expected to reach $29.39 billion by the end of 2024, accounting for 10% of all digital ad spending, according to eMarketer. That figure is projected to grow 12.9% in 2025 to $33.06 billion, and then grow another 11.5% in 2026 to $36.86 billion.
To protect ad revenue, YouTube TV has introduced pause ads, 30-second non-skippable ads, ad blocker limits and is leveraging Google’s AI to optimize the length and frequency of ad breaks as it strives to become the essential screen in every living room.
“YouTube TV’s reach and engagement, exclusive content partnerships, audience targeting capabilities, and unique measurement synergies with general YouTube, search, and Google Display make it a compelling option for achieving many advertising goals,” said Amy Rampler, senior vice president of search and social media services at Basis Technologies.
And so far, these efforts are paying off for both users and advertisers: YouTube TV, for example, has already attracted more than 8 million paying subscribers, and Anjlee Majmudar, vice president of North American programmatic at Brainlabs, said that on average, YouTube CTV clients have seen a 25% decrease in CPMs and a 33% increase in viewership.
“YouTube CTV combines the best of both worlds: a differentiated content library and a high-quality viewing experience,” she added, “and Google is investing heavily in creating interactive ad formats that enable CTV to work mid-funnel.”
Ad-supported short videos are becoming more and more popular
It took a while for YouTube Shorts to really gain traction, perhaps because everyone was so used to YouTube’s longer-form video format, but once monetization options were explored starting in February 2023, momentum began to build around the app’s short-form video offering.
“The short video format in particular offers a unique opportunity for advertisers to engage with a broader audience and reach users who don’t have the mindset or habit of regularly consuming longer-form content,” Rumpler said.
It’s a sentiment echoed by Majumdar, who said that Brainlab has seen great results from testing the YouTube Shorts format to scale influencer campaigns for its clients, particularly in the retail and CPG industries: “We’ve seen increased engagement due to click-through rates above 1% (average is between 1% and 3.5%, depending on industry and creative) and low cost per view (average less than $0.25),” she added.
In comparison, TikTok’s average CTR is 0.45%, while YouTube’s average is 0.24%, Majumdar explained. “While there are a ton of factors that influence scope – campaign type, creative, vertical and client goals – YouTube Shorts have proven to be a highly engaging format and show that there is an audience for them,” she said.
Having heard about the positive results Shorts has achieved so far, Joey Bridges, group media director at MindruveMacarta, also said that his team is currently evaluating how YouTube Shorts fit into the companyโs strategy.
Additionally, Mohan said that short videos are getting an average of 70 billion views per day, growing 50% year-over-year as more content is generated by creators.
“This suggests that as TikTok begins to decline, users and creators are gravitating toward YouTube Shorts, driving even more attention to YouTube,” said Tucker Matheson, co-CEO of Marcus A.