Tuesday, YouTube’s chief business officer, Robert Kyncl, said the company was seeing a “deceleration” in that growth.
Despite a 14% increase to $6.87 billion, YouTube advertising fell short of analysts’ expectations by more than $500 million in Alphabet’s first-quarter results.
There have been concerns among investors about Facebook’s business for months because of two factors: the ban on targeted advertising on iPhones and the growing popularity of TikTok. However, the concerns should have been directed towards YouTube as well.
YouTube’s executives said Tuesday that direct-response ads are slowing down as a result of Apple’s privacy changes
The admission, made on the company’s earnings call, came as a surprise to some analysts and underscored the cooling of the digital-advertising market.
Shares of Alphabet, Google’s parent company, fell more than 4% in after-hours trading.
YouTube has long been known for its massive audience of more than 1.5 billion users, but it has been trying to lure more marketers to its platform in recent years with a growing array of direct-response ads.
In 2017, YouTube said it had doubled the number of direct-response ads running on the platform from the year before.
“It’s not a one-time event; it’s something that we’re seeing across all of our ad products, whether it’s TrueView or reservation or Shopping,” Mr. Kyncl said on the earnings call.
Some analysts said the slowdown in growth for direct-response ads was a sign that the digital-advertising market was cooling.
“It does suggest that the market is maturing and that some of the earlier heady days of growth are over,” said Brian Wieser, an analyst at Pivotal Research Group.
Direct-response ads are attractive to marketers because they can be more tightly targeted to viewers than traditional TV ads.
But they can also be more expensive and complex to create and measure the effectiveness of.
As a result, many marketers have been shifting their spending away from digital-ad platforms like YouTube and toward more traditional platforms like television.
“We continue to see big brand dollars moving out of digital and into TV,” said eMarketer analyst Monica Peart.
In its earnings report, Alphabet said its total advertising revenue, which includes both digital and traditional ads, grew 22% in the second quarter, compared with the same period last year.
But the growth of digital advertising, which accounts for the majority of Alphabet’s ad revenue, slowed to 20% in the second quarter, compared with 26% in the same period last year.
So what does this all mean for YouTubers?
Simply put, it could mean a drop in ad revenue for larger channels.
While it’s unclear exactly how the slowdown in growth for direct-response ads will impact YouTubers, it’s likely that those with larger audiences will see a smaller percentage of growth in their ad revenue.
In addition, it’s possible that we could see fewer new direct-response ads on the platform, as marketers shift their spending away from digital-ad platforms.
This could be bad news for new channels, as it could be harder for them to break into the market.
However, it’s important to note that YouTube’s audience is still massive, and it’s likely that many brands will continue to invest in the platform.
So, while the slowdown in growth for direct-response ads may be cause for concern for YouTubers, it’s not likely to have a dramatic impact on the platform as a whole.
in Google’s advertising portfolio, according to analysts at Jefferies. The firm said that the video streaming site has “failed to gain significant traction” as an advertising platform and that it is “lagging behind” Facebook and Twitter in terms of usage by brands.
In a report released Wednesday, Jefferies analyst Brian Pitz said that YouTube is “likely to see continued share loss to Facebook and Twitter as budgets shift to where users are spending the majority of their time.”
YouTube is the world’s largest video streaming site, with over 1 billion users. However, only a small number of brands are using the site for advertising, according to Pitz. He said that the site’s advertising platform is “complex and requires a high degree of expertise” to use effectively.
Facebook and Twitter, on the other hand, are easier for brands to use and offer more features that can be used to target ads, according to Pitz. He said that Facebook’s advertising platform is “the most advanced and sophisticated” of the three sites and that Twitter’s ad platform is “quick and easy to use.”
YouTube has been working to improve its ad platform in recent years, but it has been slow to catch up to Facebook and Twitter, according to Pitz. He said that the site needs to do a better job of targeting ads to users and of providing more features for brands.
YouTube is still a valuable site for advertising, but it is lagging behind Facebook and Twitter in terms of usage by brands, according to Jefferies. The site needs to do a better job of targeting ads to users and of providing more features for brands if it wants to keep up with its competitors.