As Google parent Alphabet reported tepid second quarter ad sales growth of 4.8% for its YouTube video platform, executives took the time to express enthusiasm for plans in the connected TV space.
In the second quarter YouTube still brought in big advertising revenues of $7.34 billion – but the roughly 5% year on year growth is a markedly slowed rate compared to the 84% spike it recorded in Q2 2021 with then-record ad revenues of $7 billion. Alphabet CFO Ruth Porat pointed to a difficult 2021 comparison – which marked a rebound last year after a challenging 2020 during the onset of Covid - as impacting the recent quarter’s growth rate.
“The modest year-on year growth rate primarily reflects lapping the uniquely strong performance in the second quarter of 2021,” Porat said on Tuesday’s earnings call. She also said the quarter-on-quarter slowdown in YouTube ad revenue mainly reflects spending pullback by advertisers.
YouTube revenues don’t include YouTube TV, which only got one mention on the call, touting its 5 million subscriber milestone, including users in a free-trial period. YouTube already disclosed the metric earlier this month, which pushed the virtual MVPD ahead of other live streaming TV provider leader Hulu and some traditional pay TV providers.
Excitement for connected TV opportunity
Chief Business Officer Philipp Schindler called out its first ever appearance at the Upfronts in May as a reflection of digital and linear TV convergence in terms of both viewers and ad dollars. He said the company was “very pleased with our strong growth and upfront commitments.”
“As the number one streaming video platform to reach viewers across all devices with billions of hours of video watched every day, YouTube remains well-positioned to deliver the reach, results and relevance that advertisers need,” Schindler said, according to a transcript.
YouTube is delivering “huge incremental reach” for some of TV’s most popular events, he noted, pointing to Comscore data that found just under 50% of adults who saw a Super Bowl ad on YouTube the day of the big game didn’t see that same ad on TV.
Similar to Google-parent’s first quarter earnings call, he also highlighted connected TV as driving results for more advertisers who are tapping into the space.
Based on a Google commissioned Nielsen meta-analysis that measured YouTube CTV and TV across U.S. consumer packaged goods “on average, YouTube CTV effectiveness was 3.1 times greater than TV.”
Just last week Nielsen unveiled a new product that compares YouTube audience reach with desktop, mobile, linear and connected TV. The Four-Screen Ad Deduplication tool is designed to delineate linear TV and CTV inventory, deduplicating redundant audience data.
“This apples-to-apples comparison will be a game changer in helping advertisers make smarter investment decisions,” Schindler commented during first quarter earnings regarding the Nielsen collaboration.
According to Nielsen, YouTube accounts for over 50% of ad-supported streaming time on connected TVs among U.S. adults.
During Tuesday’s earnings call, Schindler pointed to a pilot with GSK Consumer Healthcare (now Haleon), which tested CTV campaigns in its top 10 global markets.
“The results, 73% of campaigns drove substantial lift in brand and unbranded searches, and viewers were up to 14 times more likely to search for Haleon related terms,” Schindler said, adding that bringing CTV into its existing plans also drove greater efficiencies and savings. Haleon is now expanding CTV across LATAM and EMEA markets, he added
In terms of CTV, “we are very excited about the roadmap here,” Schindler said. In May, YouTube started rolling out mobile app features for connected TV viewers, enabling more interactive capabilities.
As for YouTube Shorts, Alphabet CEO Sundar Pichai said Shorts have over 1.5 billion signed-in users each month, with more than 30 billion daily views.
Pichai also called out “a lot of potential for shopping on YouTube.” Last week YouTube announced a partnership with Shopify to help creators easily connect stores to YouTube to allow shopping across their live streams and videos.
“There’s more to come here,” Pichai said.
Roku is one streamer making moves in the shoppable TV space, inking a partnership with Walmart this summer to allow viewers to purchase products directly from their TV screen.