YouTube adds nearly $7B to Google’s ad revenue in Q4

YouTube TV
Google said advertising efforts on YouTube TV are gaining momentum but that it’s still “very, very early.” (YouTube)

YouTube significantly grew its advertising business during the fourth quarter and accounted for a larger percentage of Google’s total advertising revenues.

The company said YouTube brought in approximately $6.9 billion in ad revenue, up 46% from the same quarter of 2019. Search still chips in most of the ad revenue for the company but YouTube contributed roughly 15% of the total $46.2 billion for the fourth quarter.

Google CFO Ruth Porat said the rise in YouTube ad revenue was driven by a rebound in brand advertising and ongoing strength in direct response.

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Google’s other revenues jumped to nearly $6.7 billion during the fourth quarter thanks to growth in YouTube non-advertising and Google Play revenues. Google CBO Philipp Schindler said YouTube now has more than 30 million Music and paid premium subscribers.

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Google’s total cost of revenue for the fourth quarter was $26.1 billion, up 24%, which the company said was primarily driven by increases in its other cost of revenues segment totaling $15.6 billion. The company said the biggest factors for the increase were content acquisition costs for YouTube’s ad-supported content followed by costs for subscription content.

Google CEO Sundar Pichai was asked about YouTube’s efforts to sell more advertising on connected TVs and said his company is investing in Google TV, Chromecast and YouTube TV to ensure it can offer a YouTube experience on a screen that’s most convenient for users.

Schindler said that advertising efforts on YouTube TV are gaining momentum but that it’s still “very, very early.”

“We think that there’s an opportunity to apply some of our targeting and measurement capabilities to provide a better user and advertising experience over time,” he said during Google’s Tuesday earnings call.

YouTube TV ended the third quarter with 3 million subscribers.