Big news as Alphabet announces its annual results - and breaks out YouTube ad revenue for the first time. They made $15 billion from YouTube ads in 2019, or $41.1 million PER DAY. Holy shit.
They also retrospectively declared YouTube ad revenue for the previous two years, and the ad business has grown nearly 2x since 2018 when it was "just" $8.15bn
"I'm really pleased with our continued progress in Search and in building two of our newer growth areas, [including] YouTube," says Sundar Pichai, to which I say no shit sherlock
Some people are already pointing out - correctly - that YouTube ads are just one part of their business, but they account for the majority of their YouTube revenue.
Other YouTube non-advertising revenue is bundled in as part contributor to a separate row of their financial results, which is only slightly more ($17bn) than the YouTube ad revenue ($15.1bn) in total
As @brendangahan points out, YouTube booked $8 billion of ads in 2017, when the adpocalypse hit and massive advertisers pulled their budgets. It did better in 2018, with $11bn, then better again in 2019 with $15bn
@brendangahan But this is what happens when you run the second biggest website on the entire world wide web and have two billion monthly active users! Anyway, this is fascinating and I wish I had this info for my book amazon.com/YouTubers-YouT…
If it was it’s own business, YouTube would be the world’s 208th biggest business by revenue.
Things YouTube’s ad business is bigger than:
👖3x Levi Strauss’s annual revenue
💳 MasterCard’s annual revenue
🥣 Kellogg’s annual revenue
🍫 2x Hershey’s annual revenue
Things YouTube’s ad business is bigger than:
👖3x Levi Strauss’s annual revenue
💳 MasterCard’s annual revenue
🥣 Kellogg’s annual revenue
🍫 2x Hershey’s annual revenue
I will never tire of this section in my book about the analysts who said Google buying YouTube for $1.65bn was a bad deal amazon.com/YouTubers-YouT… 
One interesting footnote is that YouTube ad revenue is around half what analysts estimated it was back in October. My book estimated it was a $140bn business, which would be about right based on actual ad revenue using this methodology markets.businessinsider.com/news/stocks/yo…
Sundar Pichai says “We are pleased with the early results from other revenue options we offer creators” on YouTube, like memberships and merch. It’s an important area: creators have spent years spooked about their personal ad income, and may be pissed now seeing YouTube make $$$
Including the areas of YouTube business folded into other areas and not overtly reported, this analyst estimates YouTube is a $19bn business
Ruth Porat (Alphabet CFO): “At a year on year growth rate of more than 30%, we’re pleased with the ongoing strength and opportunity at YouTube [...] We continue to invest across YouTube to grow in the long term.”
BTW if you are an analyst listening in on the $GOOGL call, I will pay you in kindness to ask Porat further questions about the running costs of YouTube infrastructure etc to expand on what she mentioned just now on the investors' call
As Amanda rightly asks, YouTube creators are asking what share they get of that revenue - ie. are they getting a fair shake. Ruth Porat, YouTube's chief financial officer, was at pains to say they give the majority of ad revenue to creators
So, put another way, YouTube paid out at least $7.6 billion to creators last year. Which is absolutely wild for an industry that DIDN'T EXIST 15 years ago
If you're trying to do some reverse engineer-y maths from that, here's a stat that is kind of informative: the number of creators earning both five or six figures annually increased more than 40% year over year
Sundar Pichai: "Overall, all our user metrics are very strong. We’re global in nature, and increasingly we see newer verticals beginning to grow... For us it’s making sure as an ecosystem it works well… and makes it a more valuable product for advertisers."
YouTube's ad revenue alone is bigger than the annual government budgets of:
🇳🇬 Nigeria ($13.9bn)
🇮🇸 Iceland ($10bn)
🇪🇪 Estonia ($9.7bn)
🇳🇬 Nigeria ($13.9bn)
🇮🇸 Iceland ($10bn)
🇪🇪 Estonia ($9.7bn)
Good back of a napkin maths from the guy from BOA-ML (I think), who points out that YouTube makes around $7-8 per year from each of its users through ad revenue
OK! $GOOGL earnings call is over. Wild numbers, and a first-time look at YouTube as a standalone business. Have a look at the thread above for my thoughts 👆, then have a read of my book on YouTube 👇
amazon.com/YouTubers-YouT…
amazon.com/YouTubers-YouT…
