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YouTube ads earned $15 billion in revenue in 2019, accounted for 9% of Alphabet revenue

YouTube app on a mobile phone

For the time since it acquired YouTube in 2006, Google disclosed YouTube numbers in its earnings call. YouTube ads raked in $4.7 billion in revenues in Q4 2019, and a total of $15.1 billion in 2019. YouTube Music and YouTube Premium (ad-free YouTube) have 20 million subscribers, and YouTube TV has 2 million paid subscribers. Revenues from these subscriptions products are bundled into “other” revenues, which stood at $5.2 billion this quarter and include Google Home speakers and Pixel phone.

Ad revenue from the video platform has grown at 35% for the past two fiscal years, from $8 billion in 2017, to $11 billion in 2018, and finally $15 billion in 2019. YouTube ads’ contribution to Google’s revenues has gradually been increasing from around 7% in 2017 to just a little over 9% in 2019.

When asked about YouTube’s payments strategy, Sundar Pichai, who took over as Alphabet CEO from Google’s co-founders in December, said that payments play a critical role and work better when there’s minimal friction. “We’ve had a lot of traction with our payments product over the past 18 months.”

“We had a tremendously successful launch in India from which we learnt a lot of features, and we are bringing that and we are revamping our payments products globally.” — Sundar Pichai

YouTube launched its subscription services — music streaming service YouTube Music Premium and YouTube Premium (basically ad-free YouTube) — in India in March 2019. YouTube Premium also includes access to YouTube original programming. The music streaming service cost Rs 99 per month, and both services are bundle in a Rs 129 per month package.

We see substantial continuing opportunity is in direct response, as well as with brand advertisers . . . the non-advertising services at YouTube, mainly from subscriptions reached a $3 billion revenue run rate in the fourth quarter. We continue to invest across YouTube to grow over the long-term. In the ad supported proportion of YouTube, we pay out a majority of revenues to our creators, reflected in our content acquisition costs.
—  Google CFO Ruth Porat

To increase monetisation and add commerce partnerships, YouTube is also letting brands insert a “call to action” in a video ad, such as “signing up for a newsletter or scheduling an appointment or downloading an app or booking a trip”.

Download: Financials | Earnings Call Transcript

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