Google says YouTube is 'monetizing well' in Q4 earnings call

YouTube is continuing to draw big-name advertising and Google will continue its "push on monetizing" the mega-video hub, Google execs told analysts yesterday during the company's Q4 conference call. But just how close YouTube is to contributing to the company's earnings remains in doubt, with CEO Eric Schmidt declining to discuss specifics.

YouTube yesterday announced its Q4 revenues grew 17 percent from the fourth quarter a year ago, to $6.7 billion, and said net income was up $1.97 on a GAAP basis. Paid clicks -- an aggregate of ads on Google-owned sites and those on content partners' sites -- increased 13 percent Y-o-Y.

Schmidt dealt with numerous questions on Google's brouhaha with China, and insisted the company was committed to staying in the potentially massive market.

"We've made a strong statement that we'd like to remain in China," he said. "We'd like to do so on somewhat different terms than we have, but we remain quite committed to being there.

As for YouTube, Schmidt, in quarters past, has responded to questions on its growth by citing triple-digit growth; this quarter, while the company said YouTube was "monetizing well," Schmidt yesterday focused on the growth of the business as an ad medium.

"We are not going to give any specific metrics on YouTube," Schmidt said. "What I can say is the big shift we are continuing to see on YouTube is that it has gone from being a nice to have to an essential part of the media mix of any display campaign that our advertisers are planning."

Added CFO Patrick Pichette: "(YouTube's) homepage was nearly sold out in Q4 and that was a great testimony of the power of YouTube and we are now running ads in 20 countries worldwide so again to give you a sense of perspective of how successful YouTube has been."

Google, despite lean economic times, continued to be a landing page for any number of major brands, with many of them using YouTube as part of the mix in ad campaigns. In the past year, all of the Ad Age Top 50 have had some presence on YouTube.

Google pointed out that companies are turning an increasing amount of their spend to a more measurable ROI of online advertising, shifting to where their audiences now spend their time.

"Looking globally we saw significant uptick in retail advertisers' online spending," said Nikesh Arora, President, Global Sales Operations and Business Development. "This is a change driven both by online retailers as well as traditional brick and mortar companies. With our broad portfolio of products we are pleased with the performance of pretty much all four parts of our display strategy; YouTube, The Google Content Network, Double Click and our Ad Exchange. In YouTube we have had many successful brand advertising campaigns of note."

One trend that the company believes will help speed YouTube's monetization in 2010 is the continued push of more professionally developed content from broadcasters and other video creation sources online. Both YouTube and the broader online video space are likely to benefit from the continued evolution.

"We are going to see more and more people get excited about advertising video to the audiences which I think is going to be another big leg for the whole industry not just for us," said Arora.

Added Pichette: "When you take all of the elements that Nikesh has talked about if you think about YouTube and you think of all of the elements that are within it at some point in the future this will add up to something that we are excited about and two, that moves the needle. You could argue in many areas within this we have already started moving the needle."

Google said this year, the company focused on "putting more wood behind fewer arrows," reducing some of its product line - it shut down Lively, Notebooks and its audio ads program.

And, while search and display ads remain the major focus, the company said a continued push in online video -- like its co-hosted live streaming concert of Alecia Keyes for World Aids Day -- is to be expected.

For more:
- see this call transcript
- See this Q&A call transcript