Yahoo Movies YouTube Commands Two Thirds of the Video Ad Market – for Now | Charts
YouTube is dominating the lion’s share of the online video ad market as longer videos prove easier to monetize for platforms and advertisers. That’s currently working in YouTube’s favor, but shorter ads are becoming popular and may give TikTok an opening to steal some of that market share.
Advertisers are pouring a lot more money into YouTube this year as the market doubles down on video. In the first quarter of 2022, ad spend on YouTube skyrocketed 57% over the previous quarter, to $482 million, according to ad intelligence platform MediaRadar. There was an overall 30% increase in online video ad spending from Q4 2021, totaling $5.5 billion in the quarter.
Across digital, investments in video have been steadily growing since last year, with online video ad spending up 42% from 2020, totaling $14.8 billion — 66% of which was spent on YouTube, according to MediaRadar. The increasing spend continues to boost YouTube’s whopping $28.8 billion in annual ad revenue, which accounted for about 11.2% of parent company Google’s total revenue of $257.6 billion last year.
YouTube’s popularity has grown so much with advertisers that the site is “slowly eclipsing” traditional TV channels in ads, Amnon Siev, CEO of cybersecurity firm GeoEdge, explained. And the platform is effective at reaching younger audiences.
“To take advantage of changing viewing habits, advertisers have flocked to YouTube to get in front of viewers where they’re most engaged,” Siev said. “YouTube is the go-to for younger audiences ages 18 to 40, offering new opportunities for advertisers to reach these audiences through more targeted and effective campaigns.”
MediaRadar’s analysis also showed that platforms are generally running shorter ads across YouTube and other video services. Shorter ads make up the majority of ad spending and perhaps are more fitting for the digital and social media environment where the content is often shorter as well. On YouTube, 83% of video ads were 30 seconds or less, versus 98% on other platforms — a trend buoyed by TikTok’s popularity in short videos.
“In the future, we see a likely shift to social platforms like TikTok, which continues to rise in popularity,” Todd Krizelman, CEO of MediaRadar, said. “TikTok is making headwind in the video marketplace and will likely, if they aren’t already, shift ad investment away from YouTube.”
So why isn’t TikTok already displacing YouTube’s dominance in the ad market? Although MediaRadar’s study doesn’t focus on advertising in social media and streaming platforms, experts say there’s a key difference between monetization on TikTok and YouTube. Because ads are harder to integrate into the bite-size videos TikTok is known for, many companies might be realizing they need to rely on YouTube ads to generate greater returns. (Read our special series on how YouTube is winning the fight over content creators.)
“After years of growth through performance marketing, brands are realizing that they have to build brand equity again — and the best way to do this is through longer-form storytelling,” said Quynh Mai, CEO of marketing agency Moving Image & Content. “Enter YouTube, which is still the second biggest search engine in the world after Google and has not lost its users to TikTok, Twitch or Discord, unlike Facebook and Instagram.”
Siev also pointed out that the audiences for TikTok and YouTube is very different — and behaves differently too. TikTok users are seldom invested in watching a single video, whereas YouTube users might linger longer on videos even though they watch fewer in volume. This means greater advertising opportunities with longer videos.
“YouTube is still king, for now,” Siev added. “If you’re trying to reach a younger audience, TikTok is the place to be. … For now, YouTube remains the clear leader in the online video space.”
Research in the content creator economy backs that up. A National Research Group study released this month found that 53% of users prefer watching videos under five minutes long. Researchers said many creators start up on TikTok but eventually feel squeezed to transition to YouTube in order to earn more money.
“Although it may be easier to build an audience quickly on TikTok, this doesn’t mean that the platform has a better overall value proposition for creators,” the report noted. “While those viewers may be easier to find, they’re also a lot harder to monetize effectively: There’s a common rule of thumb among creators that you need 10 times more followers on TikTok to build a sustainable career than you do on YouTube.”
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