YouTube Grows As Revenue Generator For Google

Chris CrumBusiness

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Questions about the profitability of YouTube have loomed for years, but Google spent a fair amount of time on Thursday's earnings conference call talking up the video service's performance as its revenue is on the rise.

CFO Ruth Porat noted that it continues to grow at "a significant rate with growth driven primarily by video advertising across TrueView and Google Preferred" and that the company's "movement in Google Sites paid clicks and CPCs primarily reflects the continued growth in YouTube TrueView."

Google (under Alphabet now, remember) pointed to the recently announced Customer Match feature as an element likely to contribute to growth going forward. This lets advertisers target people whose email addresses they have and reach existing customers across Google.com as well as YouTube and Gmail.

"Whether they’re searching on Google, checking promotions on Gmail, or watching videos on YouTube, we can deliver the most relevant information based on what they’re doing, wherever they are, when they’re looking, and on any device they’re using," said Sridhar Ramaswamy, Senior Vice President, Ads and Commerce at Google in announcing the feature last month.

Google CEO Sundar Pichai said on Thursday's call that people watch hundreds of millions of hours of video on YouTube every day and that they're seeing a great deal of momentum on mobile, mainly driven by the YouTube app.

"The growth in mobile watch time also extends to videos featuring product reviews and information," he said. "People turn to YouTube when they want to research, buy or fix a product. For example, mobile watch time for apparel videos has doubled this year and videos about toys have also doubled."

"We see the same growth in advertising on the platform too. And we continue to invest in building ways for marketers to reach consumers effectively, like our recently announced shopping ads for YouTube, which lets people shop directly from a video, turning any relevant video into your digital storefront."

In a recent article, we looked at how YouTube is getting better for selling products between its cards for increasing conversions, TrueView for Shopping feature, and its new shopping ads.

This week, Google announced YouTube Red, a new subscription service that costs users $9.99 a month to use YouTube without ads. It appears to be aimed at competing with Spotify and the like and give the company another YouTube-based revenue stream.

Pichai admitted he expects most users to continue using the free ad-based version of YouTube, but the new service provides a way for them to give users the right experience for them on an individual basis.

What's going to continue to benefit YouTube more than anything is increased mobile use.

"Look, I mean to shift to video is a profound medium shift, and especially in the context of mobile," said Pichai. "And obviously users are following that. You're seeing it in YouTube as well as elsewhere in mobile. And so advertisers are being increasingly conscious. They're being very, very responsive. And so we are seeing great traction there, and we'll continue to see that. They are moving more of their traditional budgets to YouTube and that's where we're getting traction."

Seeking Alpha has the full transcript of the earnings call here.

Images via YouTube

Chris Crum
Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.