Google’s parent company Alphabet has shared YouTube’s advertising figures for the first time, revealing $15.1 billion revenue in 2019, a 36 per cent increase from $11.16 billion in 2018.
This new financial transparency is designed to “provide further insight into our business and the opportunities ahead,” according to Ruth Porat, CFO of Alphabet and Google.
Alphabet’s overall Q4 revenue was $46.08 billion, falling short of Wall Street expectations of $46.9 billion. Google Cloud reported Q4 revenue of $2.61 billion (up 53 per cent year-on-year) and Google Search $27.19 billion (up 16.6 per cent).
Alphabet CEO Sundar Pichai said: “I’m really pleased with our continued progress in Search and in building two of our newer growth areas — YouTube, already at $15 billion in annual ad revenue, and Cloud, which is now on a $10 billion revenue run rate.”
However, Ampere Analysis research director Richard Broughton pointed out “some hidden implications in the figures,” noting that “YouTube makes about as much money per hour viewed as broadcast TV does.”
“This is both impressive, but also potentially a fundamental problem for YouTube future growth,” he said. “Given 2019 growth ahead of projections, further gains above broadcast TV levels may be feasible through targeting, encouraging non-TV advertisers in, etc., but the risk for Google in the mid-term is that unless it can fundamentally improve brand recall/sales impact of ad exposure, etc., there is a fast-approaching ceiling on ad buyer spend per impression.
Broughton added: “But in the meantime, people are spending far more time on YouTube watching content, international growth powers on, and thus this is unlikely to be something that will keep Google execs awake at night for a good few years yet…”