YouTube will rake in an estimated $1.13 billion in video-advertising revenue in the United States this year, up 39% from $810 million in 2013, according to research firm eMarketer.
But while the Google vidsite is No. 1 in the segment in the States, with projected 18.9% share this year, that’s down slightly from 21.2% in 2013, per the report. As the size of the digital video advertising segment in the U.S. continues to expand, YouTube will not increase its market share significantly over the next three years, according to researcher. (An eMarketer rep said the firm does not have a breakdown of market share for AOL, Yahoo or others in the sector.)
YouTube has a bigger U.S. audience than rivals like Facebook, AOL, Yahoo or Microsoft and serves far more video clips. However, YouTube is still hampered in its ability to monetize the bulk of that traffic, because much of its content is either too short to include ads or is brand-unfriendly user-generated material. To try to persuade advertisers to spend more coin, YouTube this spring launched Google Preferred, with packages targeted to the top 5% of content in verticals like music, beauty, food and entertainment.
Google does not disclose financial results for YouTube, and the company routinely declines to comment on third-party estimates.
Worldwide, YouTube will generate net revenue of $2.8 billion, growing to $3.5 billion 2015, according to a report this month from Wall Street firm Jefferies & Co. That would imply YouTube is worth between $26 billion and $40 billion, based on Google’s market value — potentially more than Netflix, which currently has a market cap of $29 billion.
Over all, digital video-ad spending is expected to grow 56% this year to reach $5.96 billion, according to eMarketer. But growth will taper off, slowing to 13.9% by 2018, when digital video spending will reach $12.82 billion, according to eMarketer. One factor: The rise of mobile video ads will actually suppress overall spending, because smartphone video ads are shorter and often cost less than desktop video ads, per eMarketer’s analysis.
Still, video’s share of digital display ads in the U.S. will gain significant ground over the next three years, increasing from 21.6% of all digital display advertising last year to 30.1% by 2017, according to eMarketer. And video will help drive digital display revenue for AOL, set to grow display advertising sales 18.4% in 2014 helped by its video offerings. Meanwhile, Yahoo’s U.S. display business is set to drop 3.6% this year, but its push into premium video content this year will help the company return to positive growth in 2015.
Meanwhile, TV will remain by far the leading ad platform in the U.S. for the foreseeable future, totaling $68.5 billion this year, more than 10 times the digital video-ad biz. TV advertising will increase more than digital video in terms of actual dollars each year through 2018, eMarketer projects.