Is Something Up With YouTube’s Ad Business? – Next in Media | Mike Shields

Could bringing in a cool $11.2 billion in ad revenue be the sign of a problem?Only if you’re YouTube.The Google-owned video juggernaut saw ad revenue climb 9% during Q3 of this year. For most media businesses, that would be reason for celebration.Except that not only did YouTube’s 9% growth represent a slowdown compared to most recent quarters, it arrived when:YouTube’s share of TV viewing surged again, this time to 15.8% of TV viewing, more than doubling Netflix’s shareA slew of other CTV players, including Roku, Fox’s Tubi and even Magnite, reported much more robust growth this quarterYes, this warrants several caveats:YouTube’s ad growth reflects all of YouTube, not just CTVYouTube is growing from a much larger ad baseTubi’s most recent data is hard to isolate from the rest of Fox’s ad revenueMagnite is an ad tech vendor, not a content company. Although it’s leaning heavily into CTVBut still – in another era, if one network or media company was running away with share of viewing in this fashion – wouldn’t they be running away with the TV ad market?Plus, let’s not forget, YouTube is surging on CTV, and Creators at large are surging as a core marketing vehicle. Shouldn’t YouTube be doubly benefiting from all those ad dollars going toward boosting creator deals?So what gives?Theory 1YouTube missed out on the recent surge of political CTV spending because its audience is viewed as young (or not old enough to vote in many cases). Said Luke Stillman, managing director, Madison and Wall: “The political impact on the other CTV guys was significant and at their scale more than enough to move the needle. Will be interested to see how things smooth out as we get into 1Q and beyond without the political distortion.”Theory 2Brands are increasingly comfortable with FAST, which looks and feels like TV. And some brands still see YouTube as ‘not entirely TV.’Theory 3 (related to theory 2)It’s getting more crowded, and the competitive pressure on YouTube is intensifying. One buyer explained it to me as such: Brands not just blinding spending with YouTube and more, and most are more than happy to diversify their spend. Theory 4Meta is comingTheory 5YouTube is pushing no-ad options. “Subscriptions are still growing faster than ads for YouTube so they’re undermining their own ad growth rate a little with those options,” said StillmanWhat do you think?Thanks for reading Next in Media! Subscribe for free to receive new posts and support my work.Would be interesting to see YT numbers broken out by its "TV" comp vs "social" comp.Also agree on the political spend being a hindrance whereas other platforms cleaned up from the biggest midterms ever"Cannabilizing" isnt the riggt word. YT Premium delivers significantly higher RPU than ads, even for high-value viewers. Just sayin 🤷source