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Summary:

YouTube got a lot of play during this week’s Google earnings call, in part because the site is starting to move the needle for Google.

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photo: YouTube

Listening to Google’s Q4 earnings call Tuesday, I couldn’t help but notice that there’s been a change in tone with the regards to the way Google execs talk about YouTube. In the past, YouTube has always been treated as one of many parts of its business: worth a shout-out, and maybe a nice data point if time permitted.

This time around, it seemed to move more towards the center. “Video is now baked into all of our products,” said Google Chief Business Officer Nikesh Arora, adding that video is especially important for advertising: “Video is a key language that brands speak.”

Arora said that Google’s top 100 brand advertisers spent 50 percent more money on YouTube in 2012 than during the previous year. He reiterated that the site now generates more than 4 billion views a day. There was also the obligatory Gangnam Style mention, which generated $8 million in ad revenue for Psy, according to Arora. One new metric shared during the call was that 70 percent of YouTube’s in-stream ads are now what the company calls TrueView – ads that viewers can skip, and that advertisers only pay for if they’re not skipped.

Detailing all that data alone said something about the role YouTube is playing for Google these days. But YouTube seemed to pop up all over the call. In fact, the video site was mentioned a total of 23 times, according to the Seeking Alpha transcript. A year ago, YouTube was worth 15 mentions. During the Q4 2010 call, the site only got mentioned six times.

Even more striking: Arora specifically called out YouTube as something that moves the needle with regards to ad revenue, saying that the company’s ad revenue growth in the Americas was driven by “mobile and YouTube.” Google Chief Financial Officer Patrick Pichette also pointed to YouTube as a money maker, saying: “We are obviously… pleased with the YouTube business, particularly the watch page.”

Why is YouTube suddenly becoming such a big deal for Google? Primarily for two reasons: First, YouTube producers have been stepping up their game, and YouTube has invested a lot of money to bring professionally-produced channels to the site, which in turn get higher CPMs from premium advertisers.

And YouTube is expanding its device footprint. The site’s videos can now be viewed on more than 400 million devices. But more importantly, a growing percentage of these views gets monetized. One example: YouTube rolled out its own iPhone and iPad apps last year, which finally enable the company to monetize app-based views on Apple’s devices. Given the fact that YouTube now sees 25 percent of its views on mobile devices, those apps alone should add more than just pocket change to Google’s coffers.

I remember many instances over the years of journalists asking whether that $1.56 billion acquisition of the video sharing site was really worth it. Questions about whether or not Google was losing money with YouTube, always followed by the company declining to break out individual lines of business in somewhat-tense language. I also remember Google events where YouTube seemed to be somewhat sidelined.

All of that has changed as YouTube has grown up. Sure, Google still isn’t breaking out how much it exactly is making with YouTube, but it sure sounds like it has become a key money maker.

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  1. I am sure you’re right that it’s growing in importance for Google but don’t you think their actual user interface has got worse. I think it’s something to do with the push to personalise the experience

    When I am logged into google and hence youtube I get this really lame list of “because you watched this you’ll like this” type videos. When I watch one ultimate fail video doesn’t mean I want to watch all of them. Also if you actually pick a few niche channels then your start screen is full of the niche crap. The only way I get to see something more like the old youtube is log out of google and set the country to worldwide. This then gives me the more familiar youtube with all the most popular vids

    I think in their drive to personalise they end up cutting users off from the whole worlds video that Youtube is famous for

    1. Yes I agree. For all the number of suggested videos there seem to be fewer worth watching made more annoying by some peculiar featured ones. I feel that this is not peculiar to YouTube as interesting TV is a distant memory – the extra channels result in a particular voice where it seems that the same program is broadcast thereon continuously. This channel identity requirement maybe inherited from analog radio where when you sweep the frequencies for an alternative you know instantly which one you have alighted on from the cadence of the channel. Maybe this is an economic inevitability albeit contrary to the one of the laws of Thermodynamics

  2. Questions about whether or not Google was losing money with YouTube….All of that has changed as YouTube has grown up. Sure, Google still isn’t breaking out how much it exactly is making with YouTube…”

    So how do you reconcile your third statement with the second one. If GOOG doesn’t give a segment P&L for YouTube, how do you conclude “all of that has changed” (with emphasis on the “all” word)…. ???

  3. How much of the value added by YouTube is in the scenery, the audio, the video, the beat, the cleverness of the lyrics, the memorable moves or jingles. Google by analyzing a billion clicks is in a position where it could take apart a scrubbing bubbles commercial from start to where the dirt floats down the drain.

    The golden age of Madison Avenue is about to start.

  4. Jack N Fran Farrell Thursday, January 24, 2013

    How much of the value added by YouTube is in the scenery, the audio, the video, the beat, the cleverness of the lyrics, the memorable moves or jingles. Google by analyzing a billion clicks is in a position where it could take apart a scrubbing bubbles commercial from start to where the dirt floats down the drain.

    The golden age of Madison Avenue is about to start.

  5. Who wouldn’t want to get in the heart of google, but even better would be to get on top of it. If you’re interested check out http://seomixture.com. It worked for me and it’ll work for you too.

  6. Lost all my playlists. Thanks Google :-(

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