YouTube advertising revenue was $15.15 billion in 2019, up 35% on the previous year. It is the first time that parent company Alphabet has broken out revenues for YouTube, which it described as one of its growth areas, with over two billion users a month. YouTube also has more than 20 million subscribers across its premium YouTube and Music offerings, which do not carry advertising, as well as more than 2 million subscribers to its YouTube TV service.
Sundar Pichai, in his first earnings announcement since taking over as chief executive of Alphabet from Larry Page and Sergey Brin in December, said: “I’m really pleased with our continued progress in Search and in building two of our newer growth areas — YouTube, already at $15 billion in annual ad revenue, and Cloud, which is now on a $10 billion revenue run rate.”
“People thought we were crazy when we acquired YouTube,” Alphabet wrote in its 10K disclosure. Google acquired YouTube for $1.65 billion in stock in October 2006. The company said: “we will not shy away from high-risk, high-reward projects that we believe in because they are the key to our long-term success.”
The market was less impressed by the slowest fourth-quarter growth in four years, despite total revenues in 2019 of $161.86 billion, up from $136.82 billion the previous year.
In the fourth quarter of 2019, YouTube received $4.72 billion in advertising revenue, up 30% on the same quarter the previous year. Annual YouTube advertising revenue in 2019 was $15.15 billion, up from $11.16 billion in 2018 and $8.15 billion in 2017.
The company reported that the largest contributors to the growth during both periods were its direct response and brand advertising products, both of which benefited from improvements to ad formats and delivery and increased advertiser spending.
YouTube adverts now account for over 9% of total Alphabet revenues, up from 8% the previous year and 7% the year before that.
Some of that advertising revenue is paid out to content contributors. According to its terms of service, Google retains 45% of the revenue from the adverts on YouTube.
YouTube non-advertising revenue, including that for YouTube premium and YouTube TV subscriptions, is reported in other Google revenue. That includes net revenues from Google Play, hardware such as Pixel phones and other devices, as well as non-advertising revenue from YouTube. Together, these amounted to $17.01 billion in 2019, up 20% on the previous year, primarily driven by Google Play and YouTube subscriptions.
YouTube has more than 20 million subscribers across its YouTube Premium and Music Premium offerings, as well as more than two million subscribers to YouTube TV service.
To put the $15 billion global YouTube advertising revenue in context, the total value of television advertising in the United States in 2019 was around $70 billion. In the United Kingdom it was about a tenth of that. Globally, television advertising is worth over $200 billion.