Google Touts YouTube Ad Growth, Vows Continued Investment In Originals In Earnings Call

Google announced yesterday that it had clocked revenues of $26.1 billion in the fourth quarter — up 22% year-over-year — and the search giant says that YouTube and mobile search ads were primary growth drivers.

While Google does not break out YouTube ad earnings separately, research outfit eMarketer estimates that YouTube ad revenues grew 30% over the course of 2016 to roughly $5.6 billion. And eMarketer projects that YouTube ad revenues will grow 20% in 2017 — buoyed by new initiatives that will enable ads to be influenced by users’ past Google searches.

On the call, Google CEO Sundar Pichai noted that over 1,000 YouTube creators reach the milestone of having 1,000 subscribers on their channels every single day. However, eMarketer suggests that in the United States, the number of overall YouTube users has nearly reached market saturation. YouTube had 180 million users in the U.S. in 2016, eMarketer estimates, and that’s slated to grow just 3% this year.

In addition to YouTube’s huge ad intake, CFO Ruth Porat said, “We see tremendous potential ahead for … the continued development of non-advertising revenue streams for YouTube” — namely subscription service YouTube Red. And as for a forthcoming live TV service, for which it was rumored to ink a pact with CBS, Pichai declined to confirm the deal but said, “We work very closely with TV networks on their individual shows … so you’ll see us work hard to make these partnerships deeper.”

YouTube was typically tight-lipped when it came to divulging any figures for roughly one-year-old Red. “We’ve launched in five countries. We’re pleased with the early success, and it’s still early days,” Porat said. “It takes a while to build a subscription business here.” Added Pichai: “You will see us invest more, more countries, more original content … But we are seeing traction, with the rate of sign-ups.”