YouTube Ad Growth Slows Even As Shorts Grow Exponentially

YouTube ad growth

Photo Credit: Kal Visuals

Despite exponential YouTube Shorts growth, YouTube ad growth has slowed drastically after the pandemic.

Advertising revenue for YouTube in Q1 2022 only grew 14% to reach $6.87 billion, missing analyst expectations. It also represents how online advertising revenue is cooling off following the COVID-19 pandemic. YouTube ad revenue was up 49% in the same quarter just a year ago. YouTube’s parent company Alphabet reported total revenue of $68.01 billion, up 23%, which also fell short of analyst expectations.

According to Alphabet/Google CFO Ruth Porat, the cool-off is due to multiple reasons. She cites “the lapping of the exceptional performance of direct response” advertising, but also a slowdown in spending by brand advertisers in Europe due to the Russian invasion of Ukraine. Porat says Alphabet’s Q2 revenues will likely similarly be impacted as the company ceased its commercial activities in Russia in early March.

Porat says YouTube’s subscription services continue to deliver substantial revenue growth. That reveue growth is driven by YouTube TV, YouTube Music, and YouTube Premium. Alphabet CEO Sundar Pichai also gave some insight into how YouTube’s TikTok clone is performing.

YouTube Shorts now average over 30 billion daily views, up more than four times from the 6.5 billion views just a year ago. “As we’ve always done with products, we focus on building a great user experience first, and we’ll work to build monetization over time,” Pichai says about the Shorts product. In other words, YouTube hasn’t monetized its YouTube Shorts product yet to compete with TikTok.

YouTube has established a creator fund to pay YouTube Shorts creators over $100 million in the short term. In the long term, advertising will eventually make its way to the platform as Shorts become more and more popular. Individual creators can earn between $100 and $10,000 a month just by being active in the YouTube Shorts community. Music is a huge part of that strategy too, since creating videos with trending sounds can make videos go viral.