YouTube: More Than Just Pocket Change for Google

In past Google quarterly earnings calls YouTube has earned a shout-out or a short data point from the Google execs.  However, during this past Google Q4 earnings call on January 22nd, YouTube took a step towards center stage.  "Why the sudden change?", you may ask.  Well, to put it simply, YouTube made a large leap forward in 2012 and has become a key money maker for Google.

In 2012, Google's top one hundred brand advertisers spent fifty percent more money on YouTube than they had in 2011.  Google Chief Business Officer Nikesh Arora stated, "video is now baked into all of our products [and] is a key language that brands speak.”  Arora also pointed out that YouTube along with mobile are the company's two driving forces for the ad revenue growth in the Americas. 

There are a few factors that have played a role in YouTube's money making success. Firstly, as online videos and webisodes increase in popularity, YouTube's traffic increases.  In fact, YouTube has stated that the site now generates over four billion views every day.   Secondly, YouTube has invested a lot of money into bringing in professionally-produced channels.  This in turn draws in more premium advertisers, which increases the ad revenue.

A third reason for YouTube's success is due to the mobile apps that have been added to the market.  Last year YouTube developed apps for the iPhone and iPad, which has allowed them to now be able to monetize views from apple devises.  Now twenty-five percent of YouTube videos are viewed from mobile devises.  The money made from mobile devices alone is nothing to smirk at, then adding those numbers to the traffic passing through the actual site; its no wonder that Google has started shining more light on YouTube.

In the past there were many doubts and questions as to whether or not YouTube was worth the $1.56 billion acquisition.  Although Google has not clearly stated how much revenue is coming in from YouTube, it became abundantly clear, in this past Google quarterly earnings call, that YouTube is providing much more than mere pocket change for Google.  YouTube has become a very profitable investment and I only see it growing from here on.