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YouTube starts testing ads on its short video product

Rivals Meta (Facebook and Instagram) and Snap are also conducting similar tests on their short video offerings.

April 27, 2022 / 12:55 PM IST

YouTube is testing advertisments on its short-form video feature YouTube Shorts as it looks to woo more creators to its platform and counter the looming threat of rivals TikTok and Instagram Reels across the world.

In the pilot, the company is testing app install and video action campaigns, Google’s chief business officer Philipp Schindler said during Alphabet's earnings conference call on April 26. "While it's still early days, we're encouraged by initial advertiser feedback and results," he said.

The video sharing platform had launched Shorts first in India in September 2020 and then expanded it to other markets like the United States, the United Kingdom, and Canada last year, followed by a global rollout in July last year.

Alphabet CEO Sundar Pichai said during the earnings call that YouTube Shorts is now averaging over 30 billion daily views, registering a four-fold growth in the past year. "As we've always done with products, we focus on building a great user experience first, and we will work to build monetisation over time," he said.

YouTube had stated in February 2022 that it plans to test different ways creators can make money on Shorts, while detailing its roadmap for the year 2022.

It had introduced a $100 million Shorts fund in May last year to reward top Shorts creators developing original content over the course of 2021-2022. Over 40 percent of creators who received money from the fund in 2021 were not part of the company's monetisation programme YouTube Partner Program, YouTube CEO Susan Wojcicki said in January this year.

Monetising Shorts feature has become crucial for YouTube as the viewership of short videos grows as a percentage of the total viewing time on the platform. During the call, Schindler said they are experiencing "a slight headwind to revenue growth" due to an increase in Shorts viewership and the team is currently "focused on closing the gap with traditional YouTube ads over time".

This move also comes at a time when rivals Meta (Facebook and Instagram) and Snap are conducting similar tests on their short video offerings.

"We're taking a fresh look at what it means to monetise Shorts and reward creators for their short-term videos. We are very actively working on what monetisation could look like in the future," Schindler said.

These comments come as YouTube missed Wall Street expectations on its advertising sales. The Google-owned video platform posted a 14% sales growth to reach $6.87 billion for the first quarter ended March 31, 2022, as compared to a 49% growth in the same quarter last year.

Alphabet CFO Ruth Porat said that Russia's war on Ukraine had an outsized impact on YouTube ads, due to the suspension of the vast majority of its commercial activities in Russia as well as the related reduction in spend primarily by brand advertisers in Europe.

YouTube's subscription business however "continues to deliver substantial revenue growth, driven by subscriber growth for YouTube TV as well as YouTube Music and Premium" Porat said.

Pichai also mentioned that viewers are watching over 700 million hours of YouTube content on televisions on a daily basis, making it another area of opportunity.

In February 2022, YouTube chief product officer Neal Mohan had mentioned that they plan to soon allow viewers to use their phones to engage with YouTube content playing on television including the ability to read or leave comments or share videos with a friend, among others.

Focus on accelerating growth in India

During the earnings call, Schindler also mentioned that they will continue to focus on "accelerating growth in India's digital ecosystem and are excited about our expanding partnerships with a number of partners in the region".

In the past couple of years, Google has backed several companies through its $10 billion India Digitisation Fund that was announced in July 2020.

Among them include Jio Platforms, Dailyhunt parent VerSe Innovation, InMobi's mobile content platform Glance, retail merchant commerce platform DotPe, and neobank Open. On January 28, the internet giant announced a $700 million investment in Bharti Airtel to acquire a 1.28 percent stake in the firm.

Pichai had said in February 2022 that this fund is a "reflection of our confidence in the future of India, its digital economy, our desire to build products there, which we think will help us globally".

Vikas SN
Vikas SN
first published: Apr 27, 2022 11:12 am