Here’s How YouTube Is Driving Such Fast Growth for Google



New ad formats

Google’s (GOOG) YouTube platform has become the most-sought-after video platform. The company continues to innovate by bringing new ad formats and improved ad measurement tools for YouTube. A few months back, YouTube launched the bumper ads format, which the company defines as “snackable, 6-second videos that help brands drive incremental reach and frequency.” Google (GOOGL) claims that these ad formats are higher priced ads and help the company monetize its YouTube offerings.

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Another YouTube ad format that has been quite popular with advertisers is the TrueView ad format. TrueView ads are the in-stream ads wherein advertisers’ video ads play automatically before the start of a YouTube video. In these ads, the viewers can skip an ad after viewing it for five seconds. If a viewer skips an ad before viewing it for 30 seconds or before the end of the ad, the advertisers don’t have to pay anything.

YouTube Revenue growth

Improvement in Google’s ad measurement tools

Google has also been trying to improve its ad measurement tools in order to provide higher ROE (return-on-investment) to its advertisers. With its last quarter earnings, Google provided the example of IKEA, which used Google’s store visit measurement tools to gauge the effectiveness of its digital marketing campaigns. IKEA realized five times higher ROI from its digital campaigns on Google and YouTube than its previous estimation.

This kind of innovation is helping YouTube grow its revenues at a fast rate. According to a report from eMarketer, YouTube continues to be the leader in the video ad market. The report estimates that YouTube’s share of this market will be around 19.6% by the end of 2016. This market share is impressive, considering that Facebook (FB) and Twitter (TWTR) have become aggressive in the video ad space in the past year or so.


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