YouTube advertising revenue surges 50% to $5.6bn

Advertisers will spend a projected $5.6bn on YouTube in 2013, an increase of more than 50 per cent on the previous year, according to a report that underlines a shift away from traditional television ads. The sharp rise, which follows an explosion of viewing on mobile devices, comes as advertisers strive to reach younger consumers who have drifted away from television. Television’s share of advertising budgets has peaked after 30 years of growth and online video is now competing for ad spending. YouTube does not keep all of the advertising revenue that flows through its site, paying much of it to partners and “content creators”. The report, by media research firm eMarketer, predicts that YouTube’s net revenues will be $1.96bn once those partners have been paid, giving it 1.7 per cent of all global digital advertising spending. This is a larger market share than sites such as Twitter, AOL and Pandora, eMarketer said.


“Video ad revenues are expected to increase significantly in coming years for YouTube’s US operations, particularly as mobile video viewership grows,” said the report. Television remains the biggest global recipient of ad spending globally: in the US advertisers are expected to spend an estimated $66.5bn in 2013. But eMarketer is projecting only modest increases over the next three years. “There’s ongoing fragmentation in viewing,” said Dan Cryan, senior director of digital media with IHS, a media research firm. “TV viewing is more or less flat but total video viewing is going up and that’s being driven by things like YouTube and Netflix.”

YouTube, acquired by Google in 2006 for $1.65bn, has more than 1bn viewers every month and attracts about a fifth of all advertising spending on US online video. It has faced competition from rival sites such as Hulu, which expects to generate $1bn in advertising revenues in 2013, but it has maintained its lead. Hulu, owned by Walt Disney, 21st century Fox and NBCUniversal, has twice explored a sale only to call off proposed deals at the last minute.

Heightened advertiser interest in YouTube comes as a new generation of online video production studios have sprung up to cater for a younger generation that watches most of its television programming online.

Investors are clamouring to get a foothold in these companies: Maker Studios, one of the biggest online video networks, recently brought in investors to join a shareholder list that includes Time Warner, Elisabeth Murdoch and Robert Downey Jr, the film star.



Storytelling is becoming more important in the rapidly changing digital landscape

Imagine telling a writer that pictures are how we’ll communicate in the future. Andrew Delaney, global director of creative content, Getty Images, has a vested interest in visual communication but he’s probably going to be right for a while (writers, be grateful that “the only constant is change”.)

“Visual content has always been a key element in the art of brand storytelling and is becoming more important in the rapidly changing digital landscape,” Delaney recalled, “If you think of the way that human communication has evolved, we’ve gone from writing long letters for air mail to email to instant messages to tweets. This suggests that the speed of communication has become more important than the depth of communication.”

We seem to always end up attaching pictures to messages. Instagram grew from nought to 100 million users in its first two years (2010 – 2012). On April 12, 2012, Facebook bought Instagram for US$1 billion in cash and stock. “…Images and video content are growing in popularity – because a video is able to communicate message rich content faster than it takes to read a 140 character tweet.

Digital has not only changed how images are created, it has changed how accessible they are. Millions, rather than thousands, of images are created weekly now. Professional photographers siphon volumes of these off to stock image companies now. And more recently, stock images are in the form of videos. Because increasingly, video is the vehicle in which communications are carried.

“The rise of video is nothing new to advertisers and marketers. In fact we at Getty Images have been accommodating this gradual shift towards video for over 15 years because we have seen the way that technology is enabling content creators to capture content more easily and bring it to market quicker than ever before.

“This trend is driven by the continual consumption of visual content from existing technologies like cinema and TV, which have made audiences very visually very cognisant and fluent in a standardized visual language. Because of this, we have become very discerning about video. ”

“The need for video will rise exponentially as more advertisers begin to understand how video can help hook an audience quicker and for longer. The uptake of smartphones and proliferation of crowd-sourced content means that imagery is no longer defined by whether it is professionally produced or not; it’s about having a view point and connecting customers to a message that will affect them. ”

Getty’s partnership with Vimeo suggests that both companies consider that moving image will be useful to brands and businesses for a long time yet.

Getty’s main competitor Shutterstock also continues to grow. Latest figures show revenue for the third quarter was $59.6 million, a 41% increase as compared to $42.3 million in the third quarter of 2012. The company expands overseas, opening a European headquarters in Berlin, and driving image downloads to an all-time high of more than 25 million during the quarter,” said Founder and CEO Jon Oringer. “To meet these increasing demands for imagery, we’re adding thousands of high-quality images every day, offering more than 30 million in the collection.”

Fourth Quarter 2013; Revenue of $64 – $66 million. Full Year 2014; Revenue of $300 – $305 million, Adjusted EBITDA of $68 – $70 million.

Bespoke video production and our premium stock video brand ReeldealHD is a contributor to both Getty and Shutterstock with over 6000 HD clips.
We can also help you with a storytelling campaign with our bespoke video production services.


Video Ad Spend Up, Display And TV Ad Budgets Suffer [Report]

The amount of money spent on video advertising is on the rise, with 65% of brands surveyed in a new report confirming an increase in budgets compared to this time last year. Marketing agencies are spending up to 83% more on their video advertising campaigns. In the new Q4 State of the Video Industry study from and Digiday, 9 out of 10 brand and agency side participants confirmed that they planned to increase video ad spending even further in 2014, pulling the extra budget from other areas such as offline advertising and broadcast TV advertising.

State Of The Video Industry Report: Main Points

  • 31% of brands said they would pull campaign funds from broadcast TV advertising to invest video advertising, up from 19% last year
  • 10% of brands confirmed that they would divert funds away from cable advertising, down from 13% last year.
  • 30% of participants confirmed that they would consider moving their marketing budget away from display advertising into video advertising.
  • 26% will decrease their search budgets in favour of paid video ads, a significant increase from the previous 3%
  • 43% of brands are purchasing mobile video today, as are 7 out of 10 agencies
  • 70% of marketing agencies and 65% of brands want clearer measurements so they can compare the effectiveness of online, cable and TV advertising.

Video Ad Spend Up, Display And TV Ad Budgets Suffer [Report]

In 2012, 58% of agencies and brands borrowed from their broadcast budgets to fund at least some video advertising spend. 45% confirmed they had pulled 1-10% of their broadcast dollars for video, 9% drew 11-20% of their available budget, and 4% more than 20%.

Video Ad Spend Up, Display And TV Ad Budgets Suffer [Report]

75% of brands confirmed that they will buy their video ad inventory from an ad network, up from 61% in 2011, but there’s a 10% drop in purchasing directly from a publisher with only 68% confirming that this is to be their preferred choice. For agencies, 85% are just as likely to buy from a publisher as they are from a video ad network.

Both agencies (28%) and brands (34%)are more likely to buy from an exchange, with 21% of brands and 36% of agencies confirm they will purchase from a Demand Side Platform.

You can see the full report from Digiday and Adap.TV here:


40% Of YouTube Traffic Now Mobile, Up From 25% In 2012, 6% In 2011

it’s hard to get people to concentrate long on anything on their phones and tablets, yet YouTube seems to be the exception. The video service is quickly going mobile, with small screens making up 40% of its traffic now compared to 25% last year, Google said.  In 2011, just 6% of YouTube traffic came from mobile.

Google’s not the only one rapidly shifting a 1 billion+ user base to mobile.

To put its transition in perspective, Facebook said it had 819 million monthly mobile users (73%) out of its total 1.15 billion users in Q2 2013, up from 543 million (56%) of 955 million in Q2 2012, 325 million (43%) of 739 million in Q2 2011, and 155 million (32%) of 482 million in Q2 2010. Note these people used Facebook mobile at least once, but may also have used desktop. Facebook doesn’t share what total percentage of usage comes from mobile, but 41% of its ad revenue comes from phones and tablets, up from 30% in Q1 2013, 23% in Q4 2012, and 14% in Q3 2012.

As former director of product management tweeted today, YouTube has been investing in a great mobile experience for the web and Android for a long time, and more recently for iOS since it took control of the app back from Apple.

Specifically, Walk says YouTube formed the mobile team in 2007 before there was much demand for mobile or revenue there. It transcoded all videos to be able to be served on mobile formats, and did a deal with Apple to get a YouTube app pre-installed on the iPhone.

The increasing importance of mobile to YouTube underlines the need for it to work things out with Microsoftand get a high-quality app released for Windows Phone. After months of back and forth, Microsoft launched a YouTube app it created, but it didn’t meet Google’s standards and was shut down. Earlier this month, a much-stripped-down YouTube “app” for Windows Phone was released that merely boots users to the mobile site.

The latest YouTube mobile product news includes its plan to let users save and watch videos offline starting in November. Before that, it launched multi-tasking in its iOS and Android apps, allowing people to minimize videos but keep their audio playing while they search and browse for more content to watch. That’s especially helpful for people who use YouTube’s vast library of music videos as a music streaming service. These have all been well-received, and no competitors seem able to challenge YouTube’s reign as the home of user generated video.

Video Ad Spending: Moving From TV To Online

Video is the fastest-growing digital ad format according to eMarketer. US digital video ad spend is expected to rise by 41.4% this year and by nearly 40% next year as well, when outlays will reach $5.7 billion.

Findings from the Interactive Advertising Bureau (IAB) show that much of that increased digital video spending will come out of former TV budgets. Seventy percent of buy-side US senior executives told the IAB they would likely move TV dollars to digital video in the coming year. An even greater 75% of all US senior executives surveyed said the same, suggesting there is significant excitement around digital video from all corners. However, those on the buy side may be slightly more realistic about how budgets will really move.

As to which digital video ad formats would likely see the biggest bumps in investment, an April 2013 study from Be On, a division of AOL, found that 73% of marketers polled worldwide expected to increase spending on pre-roll ads over the next 12 months. Social video ads came in second, at 53% of respondents.

Putting dollars to digital video, though, does not have to mean leaving TV behind, and there are increasing opportunities for cross-platform ad campaigns, something marketers seem particularly excited about.

According to the IAB, nearly two-thirds of respondents who had previously launched cross-platform ad buys seemed happy enough with their results that they said they would increase their budget for combined TV and digital video buys going forward.