YouTube Ad Sales Hit $4.7 Billion Last Quarter Vs. $3.6 Billion Year Ago – Update

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Google may start to pay publishers for content. Alastair Grant/AP/Shutterstock

UPDATED with CEO comments from earnings call

Sundar Pichai, CEO of Google parent company Alphabet, said the advertising model for YouTube is changing an growing. Direct response is becoming increasingly popular with consumers and advertisers, he said, allowing for improved monetization of the social video network.

“Direct response is a huge growth area for us. Increasingly, when you look at the fact that people are experiencing a lot of goods and services as part of their YouTube [viewing, the question is], how can we create better commerce experiences? … There’s more room on monetization levels. I think we see that as a big opportunity and are investing for it.”

Travel is an example of interesting outlet for advertisers, he said. “When I want to go to a place, I research it on YouTube” and book it directly. “It offers a similar opportunity as search over time.

YouTube said earlier that advertising revenue on YouTue rose to $4.7 billion for the quarter ended in December – from $3.6 billion the year before. For the full year, YouTube ads generated $15.15 billion, up 36% from $11.16 billion in 2018.

Google Search revenue rose to $27.2 billion from $23.3 billion. The company, which accounts for more than 70% of global search ad revenue,  is the leader in the space alongside Facebook.

It was the first earnings announcement since Sundar Pichai took over as CEO of Alphabet from Larry Page and Sergey Brin, who stepped down in December.

“Our investments in deep computer science, including artificial intelligence, ambient computing and cloud computing, provide a strong base for continued growth and new opportunities across Alphabet,” said Pichai.

“I’m really pleased with our continued progress in Search and in building two of our newer growth areas — YouTube, already at $15 billion in annual ad revenue, and Cloud, which is now on a $10 billion revenue run rate.”

Total quarterly revenue hit $46 billion. Earnings per share came in at $5.35.

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