COMMENTARY

YouTube Growth Slows: CTV, Competition Poised to Make a Dent?

• by Wayne Friedman , Staff Writer, 7 hours ago

On the surface, Google’s YouTube second-quarter results look great -- with a 13% increase in advertising revenue to $8.6 billion. But Wall Street was expecting a bit more -- like $8.93 billion.

In addition, analysts wonder whether increasing competition -- from many outside influences --  is waiting in the wings and poised to make a few dents in the big streaming video site.

The first indication of potential softness comes from the dominant Google search business itself -- a business that climbed 14% in the period.

MoffettNathanson Research says Google’s growth in search at the company has outperformed YouTube video ad growth in nine of the last 12 quarters -- and adds that this is surprising, given the age and engagement differences between the YouTube and search markets. 

There are also concerns that YouTube Shorts is not doing as well as non-Short inventory. The problem is that TikTok and Reels may remain stronger -- especially when it comes to mobile.

The good news is that YouTube has seen continued quarterly improvements since the first quarter of 2023 -- rising 2%, then 5%, 12%, 16%, and 21% -- in advertising revenues. 

An analysis seems to suggest that YouTube seeing a dip most recently to 13% could mean a change is coming.

The broader view shows the current advertising weakness in not only linear TV video advertising, but also a maturing and softening of streaming TV ad activity.

Perhaps this indicates a bigger picture -- that YouTube depends heavily on brand advertising -- upper-funnel, awareness engagement that can be particularly tough to prove out, in terms of return on media investment.

And there are new connected TV (CTV) competitors to consider going forward -- with strength in Amazon Prime Video strength and retail media.

The positive element has been core viewing results for streaming. The most recent Nielsen reading shows YouTube rising to another best result with 9.9% share of total June viewing for persons two years on older when it comes to all TV-video viewing.

Finally, there is this: Disney+ has been considering the idea of adding "user-generated content" -- core YouTube content -- to its platform, to pull in a broader range of viewers.

Seems like a big task. But getting even a small piece of  some $9 billion in potential ad revenue per quarter could be a big deal for any new legacy-owned streaming platforms’ profitability. Someone is hitting the ‘like’ button.