Ad spend on YouTube is set to rise by four per cent to reach a total of US$30.4 billion (almost $47 billion) in this year, according to WARC Media.
This growth in revenue is despite YouTube being hit hard by the digital ad market slowdown. But, considering that it reaches half of all internet users, it still commands a strong position in the online video ad market.
YouTube is also prioritising new advertising formats, such as its short-form TikTok-esque Shorts video series and a new CTV play with unskippable 30-second ads.
“It’s been a tricky 12-month period for YouTube, which is increasingly battling on two fronts, against short-form video platforms like TikTok as well as long-form content streamers in the connected TV space. However, as trading conditions improve in digital advertising, YouTube can expect to see revenue growth improve,” explained Alex Brownsell, WARC Media’s head of content.
“In this WARC Media’s Platform Insights report, we take a closer look at YouTube to provide marketers with evidence-based insights on the challenges and opportunities the platform offers at a time when ad formats and technologies are fast evolving and understanding audiences is becoming ever more important.”
In Q4 2022, YouTube’s ad revenue declined by 8.8 per cent year-on-year as marketers shifted spend to retail media and search. YouTube was also hit with renewed pressure from TikTok and Instagram Reels for ad dollars and Apple’s ATT framework.
But, according to WARC, there might be some light at the end of the tunnel for the Alphabet-owned video platform. As trading conditions become more favourable, the industry body has forecast YouTube’s revenue to accelerate 10.3 per cent in 2024, to reach US$33.5 billion (AU$51.51 billion) by the end of the year.
What’s more, retail brands are expected to spend US$4.1 billion on the platform in 2023 — up 4.6 per cent year-on-year. WARC also said that technology and electronics brands would spend an additional eight per cent and toiletries and cosmetics brands are expected to boost spending by 4.3 per cent.
The data comes from WARC’s Platform Insights report and also showed that APAC was a critical market for the platform. A WARC survey found that nearly half of brands in APAC run display ads on YouTube, though this enthusiasm has not translated to shoppable advertising with less than a fifth of advertisers choosing to run that format on the platform.
