YouTube does not view Facebook as an imiment threat to its share of video advertising revenues because it believes the market is big enough to fuel growth for both for now.
Robert Kyncl, head of content and business operations at YouTube, told the Financial Times that the growing appetite for video meant that it “will be a decade before we bump into each other”. Advertisers and media owners expect online video to pull budgets from TV, search and display but agree the migration will be slow due to the challenges of shifting to engagement metrics rather than reach to replicate TV’s high CPMs.
“Before it was just and TV,” Kyncl said. However, the market has become crowded over the last two years with YouTube now competing with not just Facebook but also the fledgling offerings of Snapchat and Twitter’s Vine video app. He said the rush for online video was indicative of it “becoming mainstream” though quelled suggestions from some quarters of the advertising industry that YouTube’s crown as the top player was at risk.
Kyncl made the comments ahead of Facebook’s announcement earlier this week that it will share ad revenue with video creators using a similar split to YouTube. The social network, which has seen daily video views rocket from 1bn last September to 4bn in April, wants to prove its videos can be profitable for advertisers as it pushes to host more premium content on its site.
Google does not split out YouTube’s contribution to its $60bn of advertising sales, however eMarketer estimates it earned $3.04bn last year after it paid back traffic acquisition costs to content creators and advertising partners. The video site's gross revenues are expected to increase 25 per cent to $9.5bn this year, up from $7.6bn in 2014.
Kyncel said that advertising revenue for YouTube had risen 50 per cent each year for the past three years. Despite this, the company is still trying to work out how to extract the maximum value from video, particularly on mobile where it is predominately making less money per ad.
The issue was brought into sharp focus during Google’s latest quarter when it suggested YouTube rather than its mobile search and display ads were the reason for cost-per-click declines.
The YouTube executive also reasserted its status as the biggest channel for vloggers and social influencers using video. Facebook and other video services such as Vessel have stepped up efforts to tempt creators away from Google in the hope that their large following will then make the transition also.
“If you’re a content creator you want to publish on as many platforms as you can,” said Kyncel. “Exclusivity is virtually impossible to pull off.”
Currently, YouTube and Facebook run video offerings with enough differences that the more astute marketers are testing how the two can work in parallel rather than deciding between one or the other. YouTube’s users visit to actively search for content that is usually generated by other users. Whereas on Facebook, the videos appear between posts and as such the experience is more passive.
A recent study revealed that Facebook is fast emerging as a more realistic alternative to YouTube for advertisers to spend the bulk of their video advertising budgets. Video views on the social network are tipped to surpass two trillion this year, which is two thirds of YouTube’s forecasted total for the same period, it revealed.