Even as linear TV continues to struggle, the YouTube video advertising market continues to grow.
The Google-owned video platform on Thursday reported advertising revenue of $8.1 billion in the first quarter of 2024, up more than 20% from $6.7 billion in the first quarter of last year. Wall Street estimates predicted YouTube ad revenue of $7.7 billion.
The first quarter is often a difficult quarter for advertising. In the fourth quarter (which is typically the best quarter for advertising), YouTube generated $9.2 billion in ad revenue. Both quarters were up more than $1.2 billion from last year.
During the company’s earnings call, CEO Sundar Pichai noted that subscriptions are “increasingly important to YouTube,” noting that YouTube Premium and Music now have more than 100 million subscribers, and YouTube TV exceeding 8 million subscribers.
“In the first trimester [YouTube in the] “The show benefited from a combination of strong growth in watch time, innovations in the user and advertiser experience and a shift in brand advertising budgets from linear TV to YouTube,” he said. added Philipp Schindler, Google’s chief commercial officer. “Viewers watch YouTube because they expect access to everything in one place, across screens and formats, to their favorite creators, live sports, breaking news, educational content, movies, music and much more. And advertisers continue to reach out to audiences they can’t find elsewhere.
YouTube is experiencing double-digit quarter-over-quarter growth as linear TV companies report continued year-over-year declines in ad revenue, a sign of the changing dynamics of video advertising.
As for subscriptions, the line item “Google Subscriptions, Platforms and Devices” reached $8.7 billion in the quarter, with executives citing YouTube as a major reason. That being said, cost of revenue also increased 10% to $20.7 billion, “with the increase primarily driven by content acquisition costs associated with YouTube,” said CFO Ruth Porat.
Subscription revenue was negatively impacted in the first quarter compared to the fourth quarter, due to the schedule of NFL Sunday Ticket games.
On the call, Schindler was asked about YouTube’s interest in more sports rights, like the NBA.
“We have significant, long-standing partnerships with the most popular sports leagues in the United States and around the world,” he said. “Clearly, these partnerships, combined with a very large audience of sports fans, drive investment and subscription experiences across numerous offerings, NFL Sunday Ticket, YouTube TV, primetime YouTube channels , etc. But we have nothing to announce at the moment. We’re obviously always looking at where we can create more value for our users, for our advertisers, for creators.
YouTube’s parent company, Alphabet, reported revenue of $80.5 billion and net income of more than $23.6 billion. The majority of this revenue still comes from Google Search.
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