YouTube is eating the TV industry’s lunch

YouTube’s advertising revenue has yet to reach a ceiling in its exponential growth. In Alphabet’s recent earnings call, the company claimed $8.9 billion in quarterly revenue from YouTube ads alone. At this rate, YouTube ads revenue could match that of the entire broadcast advertising industry for 2024.

Meanwhile, the television market continues to decline thanks to cord-cutting—which bodes well for YouTube’s long-term outlook. 

A good short- and long-term outlook

YouTube’s advertising revenue is about to hit a new peak. With $8.9 billion in Q3 revenue, the company has reported $25.7 billion for the year so far. That puts YouTube over $3 billion ahead of where it was at this time last year. ( For reference, it added $2 billion to its revenue between 2022 and 2023.)

Television ads are bottoming out right around the same time. In 2023, the entire broadcast industry made $33.84 billion in ad revenue; YouTube made $31.51 billion. Almost every major television company, from Warner Bros Discovery to NBCUniversal, saw significant advertising declines in 2023. There’s some basic market inertia: As YouTube rises, television falls. 

While YouTube also gets to control its own advertising revenue by divvying up that money between creators, there’s no centralized “television” industry collecting advertising revenue. Rather, it’s a collection of channels who all work independently, making business operations even more difficult. That $33.84 billion in broadcast revenue isn’t for one firm; rather, it’s amassed by several smaller companies. 

In advertising, the 18-49 demographic is often considered the prime age for viewership. YouTube sits right in this pocket, with 25- to 34-year-olds constituting the largest age group on the platform. YouTube is also hugely popular with kids, which signals good things for its advertising horizon. Not so in the linear TV world, where audiences keep getting older. (The average MSNBC viewer, for example, is 70.)

Why TV ads are now dominated by pharmaceuticals

By now, many advertisers expect that linear television ads will only reach an older audience. The core ad groups in the market now are pharmaceuticals, telecommunication, and professional services. Demand from multigenerational markets, like automotive and retail, has all softened. Feel like TV ads are all hawking the latest drug? That’s advertisers responding to an aging audience. 

But television isn’t dead. Rather, the audiences have moved, embracing the now dominant streamers like Netflix and Amazon. These streamers have ad-supported tiers, too, where consumers can pay a lower rate. But the Netflix ad-supported tier has 40 million global monthly active users, compared to the company’s 270 million total subscribers. Because of that diminished audience, many ad buyers have stayed away

This all leaves video advertisers in a difficult position. Linear TV audiences are on the decline, and their demographics are unfavorable. But streaming audiences are small, given the relative unpopularity of ad tiers. All that leaves is YouTube—and sure enough, its revenue is skyrocketing.

https://www.fastcompany.com/91221698/youtube-is-eating-the-tv-industrys-lunch?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss

созданный 9mo | 4 нояб. 2024 г., 18:40:05


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