Night Light | State of YouTube

May 02, 2024

Why YouTube Ad Revenue is Up

The Q1 YouTube earnings are in, and things are looking good. YouTube reported a record high $8.1B in revenue (much higher than expected). For everything going on in the economy, to have ad revenue up 20%, that’s massive.

$8.1B 🤯

Where is this coming from?

It’s interesting that revenue is up 21% given that YouTube’s full focus is on Shorts. They’ve had a hard time monetizing Shorts (there’s no programmatic ads) and unless you’re pulling in billions of views on shortform, you’re not making significant money. Yet ad revenue is continually increasing.

I do believe we’re seeing brands spending on YouTube for the first time and finding success. Media dollars are moving from TV and traditional entertainment over to YouTube. If you take a look at the top categories on TV, none of them are retailers (and it’s been this way for awhile). I’ve been seeing more and more legacy brands like Bass Pro Shops, Carhartt, and L.L.Bean advertising on YouTube.

I’m actually seeing a few Morgan & Morgan ads on YouTube.

YouTube is dominating your living room.

Neal Mohan said that “Youtube’s next frontier is the living room and subscriptions”, and I couldn’t agree more with this. We know that almost half of all YouTube viewership is taking place on TV screens, YouTube TV has more than 8 million subscribers, and 100 million people are subscribed to Premium/Music. NFL Sunday Ticket has also been a huge driver for increased subscriptions. Sports content is underserved, but I’ll save that for another Night Light.

The role of podcasts.

Podcasting has played a big role in this too. It’s moved from audio-only to video-first, almost a third of viewers prefer YouTube over Spotify/Apple Music (up 15% from 5 years ago). Shorts has become the main funnel when finding new podcasts. You see a viral Theo Von clip, and the longform is only one click away. You’re not seeing clips on Shorts and then opening up Spotify, it’s all on the same platform.

The big takeaway.

I'll continue to bet on YouTube over any other social platform in terms of monetizing video. I still think that YouTube is the end game for most creators building businesses on the Internet. And I couldn't be more bullish about the future of YouTube and its ability to enhance monetization for all creators.

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