Skip to main content

TikTok Is Making YouTube Change Its Game — and It’s Costing Alphabet a Fortune - IndieWire

With more than one billion monthly active users, TikTok’s explosion in popularity over the last two years forced other social media players to play catch-up, but that pivot is costing YouTube a quarter-billion dollars. A new report from the media analysts at MoffettNathanson shows that briefer videos cannibalize viewership (and creation) of longer ones, which means sacrificing commercials . MoffettNathanson now expects YouTube will miss out on $275 million in previously estimated ad revenue this quarter.

The researchers previously expected YouTube’s ad revenue to grow 9 percent this quarter to $7.49 billion. However, as usage trends toward its harder-to-monetize Shorts feature, MoffettNathanson now forecasts YouTube’s overall ad revenue to grow just 5 percent. As short-form becomes the form for social video, what was once the only cell-phone game in town also faces stiff competition from Meta’s Instagram and Facebook, both of which boast a solid track record of successfully monetizing new features.

Related

Related

Released worldwide last July, Shorts differ from normal YouTube content in that videos are limited to 60 seconds, presented vertically, and play for users in an endlessly scrolling format. (You know, kind of like TikTok.) Instagram Reels and Facebook’s short-form video features are similar.

While YouTube is experiencing a real “Skip Ads” moment, analysts were pleasantly surprised on Wednesday when the platform reported that more than 1.5 billion people watch Shorts every month. (TikTok hasn’t updated its user count since the fall, but recent third-party estimates place it as high as 1.6 billion.)

With MoffettNathanson estimating YouTube total monthly active users at 2.9 billion, Shorts has an impressive 50 percent penetration — giving YouTube the lead over its competitors’ TikTok copycats. Snap Spotlight reaches an estimated 30 percent of its 612 million monthly active users and Instagram Reels access 43 percent of the app’s 154.9 million U.S. user reach.

Still: YouTube might have better penetration compared to Instagram, but MoffettNathanson believes Instagram users spend more time on the app’s short-form videos. “With an average view likely lasting only a few seconds, we estimate that this viewership accounts for only a small fraction of the over 1 billion hours consumed on YouTube daily,” the report reads.

YouTube and Meta are now forced to think as much about viewership as they are about penetration. TikTok’s popularity shows that users love short-form videos; if YouTube can’t offer them, it risks losing its dominant position in the social video space.

Meta and Alphabet executives both warned in recent earnings reports that going short will cost their companies. YouTube’s recent decision to prominently place Shorts right next to the Home button on its app is part of the reason why analysts are expecting the short-form hit to come for Alphabet this quarter.

Compared to Instagram Stories, Facebook Reels serve just one-tenth the number of ads. TikTok videos come with a third of the number of ads as Instagram Stories. And on YouTube Shorts? Ads are “seemingly nonexistent,” MoffettNathanson wrote, as YouTube appears “to be just testing advertising solutions at the moment.”

This isn’t the first time big social media players have been forced to pivot. When Snapchat’s 2013 Stories feature quickly surpassed the popularity of its original messaging function, Instagram made its own copycat in 2016. Facebook introduced its version the following year. They needed to introduce the features in order to compete, but Meta had to scale user engagement before it could more fully monetize them.

“The pain Meta and YouTube are experiencing today largely mirrors the pain the former experienced several years ago as it transitioned to Stories. It took time for advertisers and advertising demand to adjust, but those few quarters of turbulence have since paid many returns,” MoffettNathanson wrote.

Even for short-form leader TikTok, analysts note that monetization is in the early stages. Advertising on the platform requires brands to create ads that differ from those they use on existing platforms, thanks to TikTok’s novel format. Still, MoffettNathanson notes that TikTok shows three times the number of ads as Reels.

Analysts expect short-form ad-load to ramp up over time on YouTube, Facebook, and Instagram. But they note that Meta has a key advantage: Meta Ads Manager allows advertisers to turn their existing News Feed or Stories ads into a Reels ad at the click of a button. Your move, YouTube.

Sign Up: Stay on top of the latest breaking film and TV news! Sign up for our Email Newsletters here.

Labels:

Comments

Post a Comment

Popular posts from this blog

These money and investing tips can give you a smooth ride in a rough market – MarketWatch

Don’t miss these top money and investing features: Sign up here  to get MarketWatch’s best mutual funds and ETF stories emailed to you weekly! INVESTING NEWS & TRENDS How to approach rebalancing your portfolio for 2023 It’s not a good idea to rebalance your portfolio at preset intervals Read More Bonds aren’t more attractive than stocks even as yields register a 15-year high The S&P 500’s return is similar when the 10-year Treasury yield is high or low. Read More Here’s who’s been trading crypto, and how they’re doing A new study finds that most people who entered the cryptocurrency market have lost money — and that those people are young men. Read More BlackRock sees these thematic ETFs potentially outperforming in 2023 In this week’s ETF Wrap, MarketWatch spoke with BlackRock’s Jay Jacobs on investing themes he likes for 2023 as investors worry about a slowing economy and monetary tightening. Read More Three seasonal effects in the stock market begin around T...
Post a Comment
Read more

Four months until SACSCOC visits Auburn: Four things you might not know about SACSCOC – Office of Communications and Marketing

Notice body There’s less than four months remaining until Auburn University’s accrediting body, the Southern Association of Colleges and Schools Commission on Colleges, or SACSCOC, arrives for its on-site visit. As the Accreditation team prepares for the on-site phase of the reaffirmation process, we want to share four things you might not know about SACSCOC: 1. SACSCOC is self-governed by the accredited institutions SACSCOC’s Principles of Accreditation requires a model of shared governance of its member institutions and holds itself to the same standards. The Commission on Colleges is operated by the SACSCOC Board of Trustees. The 77 Board members are elected by the College Delegate Assembly, or CDA, which is comprised of one voting representative from each of the 780 SACSCOC-accredited institutions. Each representative is the president or other chief executive of their respective college or university. In other words, the election of SACSSCOC’s leadership is in the hands of its ...
Post a Comment
Read more

Coinbase Cuts Affiliate Marketing Commission Rates for Influencers - Business Insider

Some influencers earn revenue by driving sign ups for crypto apps using affiliate links. Crypto exchange  Coinbase recently lowered how much it pays some influencers per sign up. The company blamed the change on “market conditions” in emails to influencers leaked to Insider. Crypto exchange Coinbase has lowered how much it pays some social-media influencers who drive sign ups to the platform, according to emails sent to two creators and shared with Insider. “Due to market conditions, we are reducing payouts on the program to ensure we remaining profitable,” both emails said. The two personal-finance influencers were offered different terms by Coinbase, but both were substantially lower than previous payment schemes for its affiliate program. The influencers requested anonymity in order to speak freely, but their identities are known to Insider. Here’s what Coinbase offered, according to the emails: One creator was earning as much as $40 per sign up as ...
Post a Comment
Read more