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How Google’s YouTube Plans to Take Away Ad Dollars from TV

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YouTube revenues estimated to have grown by more than 40% last year

Google’s (GOOG) YouTube continues to make rapid strides. According to Google, more users aged 18–49 access YouTube on their mobile devices than they access any cable network in the United States. Also, the time that people spend watching YouTube more than doubled in 2015. The YouTube app is now pre-installed on smart TVs, which have started to become popular among users.

YouTube’s progress is strengthening its plans to take ad dollars away from TV. YouTube continues to lead the video ad market despite growing competition from Facebook (FB) and Twitter (TWTR). Read Facebook’s ‘Suggested Videos’ Unlikely to Threaten YouTube to understand how this is the case.

According to a report from eMarketer, and as the chart above shows, YouTube’s worldwide net ad revenues are estimated to have risen from $3.0 billion in 2014 to $4.3 billion in 2015, a healthy growth rate of 41%.

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Google launched new YouTube services last quarter

Google continues to invest in new features for YouTube. It has improved its ad technology by improving measurement techniques so that marketers can understand the effectiveness of their ads. Google has also developed a new feature wherein users can watch virtual reality videos on YouTube.

Last quarter, YouTube also launched its YouTube Music and YouTube Red services. Although YouTube Music is free, you can subscribe to YouTube Red for $10 per month. YouTube Red offers ad-free video and music streaming, and it also allows subscribers to watch videos offline. This is an attempt by YouTube to be the preferred platform for viewing paid video services. This market is currently led by Netflix (NFLX).

For diversified exposure to Google, you can consider investing in the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ invests 5.2% of its holdings in Google.

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