YouTube’s US Video-Ad Revenues to Climb, But Market Share Won’t

/ Sep 11, 2014

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YouTube’s net video-ad revenues in the US will climb to $1.13 billion in 2014, representing 18.9% of the total US digital video ad market, according to a new estimate from research firm eMarketer. (The number represents revenues generated from ads running on the site’s video clips, and does not account for banners, search, and other types of ads.)

eMarketer YouTube Ad Revenue in US 2014While still the undisputed king in ad-supported digital video, YouTube isn’t likely to increase its share in the overall market in the coming years, eMarketer added. This is because while YouTube promises great volume and reach among categories like beauty and gaming, the site still lags behind other players in the digital video space in terms of offering “premium” inventory.

Advertisers are “increasingly drawn to platforms with exclusively high-quality, well-produced content. Much of the time audiences spend with digital video in general is not useful for advertisers, such as clips that are either too short to include ads or not brand friendly, and both are attributes of many user-generated YouTube videos that get the most views,” said eMarketer in its analysis.

As a result, the firm is pretty bullish on platforms such as AOL and Yahoo, which continue to invest in original video content of a quality that’s attractive to advertisers. eMarketer expects AOL’s US display ad revenues to grow nearly 20% in 2014 — helped by ads that are placed alongside the company’s premium video inventory. Similarly, while Yahoo will likely see a 3.6% drop in display ad revenues this year, eMarketer believes the company’s “intensified” push into premium video will result in a positive turnaround in 2015.

For its part, YouTube has been trying to combat the issue of non-premium inventory on its platform, most recently with the launch of the Google Preferred program, which gives advertisers the chance to buy media against only the top 5% of channels across categories like beauty, entertainment, music, and food.

Earlier this month, analysts from Jefferies Marketing estimated that YouTube will net $2.8 billion in global ad-sales revenue, and could be worth anywhere from $26 billion to $40 billion based on the platform’s future growth trajectory.

Overall, eMarketer eyes continued growth for digital video ad spending in the US, growing 56% this year to $5.96 eMarketer US Digital Video Ad Revenue Growthbillion. That will taper off though, the firm said, slowing down to 13.9% by 2018 when it expects spend to reach $12.82 billion.

A couple of reasons are given for the slow-down: The lower cost of mobile video ads and the continued rise of SVOD platforms like Netflix and Amazon, which do not support advertising.

TV, meanwhile, will remain the undisputed king, totaling $68.54 billion this year, according to the estimate. But you already knew that.

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