Have we been living in a bubble in relation to YouTube and its advertising business?

For many years, Google (or Alphabet, which has been its name as a corporation for a couple of years) has not given data on the income generated by YouTube, one of the star pieces of its service network. However, from the outside, it was not easy to see how YouTube was growing and growing and how it was becoming more and more popular.

The viewing data was public and the figures made it clear that more and more people were uploading content to that network and, above all, that more people were consuming it. Youtubers were establishing themselves as new media stars, influential content and product prescribers, and YouTube’s greatest hits had a direct effect on popular culture. One need only think about how many of the great virals on the video network have set the agenda.

Analyst estimates indicated that YouTube moved a lot, a lot of money. But his forecasts were not exactly accurate, as it turned out a couple of months ago.

For the first time, in the presentation of the results of the last quarter, Alphabet has given concrete figures on how much money YouTube moves. YouTube takes $ 8 on average for each user of its platform and has an income of $ 15 billion. That was what came in throughout 2019, rising from 11 billion in 2018 and 8 billion in 2017.

They are very high figures, true, but not as much as YouTube was expected to move. So when the data came out, it was already noted that these numbers broke with the estimates that analysts had been releasing. And, in the end, the advertising revenue of YouTube, that jewel in the crown, lost even more shine if it was thought that the cloud division, which achieves less fanfare, made $ 10 billion in 2019.

So have we been living in a kind of bubble regarding what happened with YouTube? Has your weight and role in the advertising market been magnified?

An abrupt drop in revenue projections

The question is complex, but the truth is that the analysis firms are now starting, in the hangover of the real numbers, to correct their future forecasts and their income estimates.

eMarketer has lowered the figures of what YouTube will achieve, considering that what it had achieved in the past was already well below what they expected. The consultancy had estimated that in the United States alone YouTube was going to make more than 11,000 million dollars in 2019. The reality was that it remained above 7,000 million. So they have dropped what they expect me to do in revenue in the next few years by a few billion dollars.

Only with the United States figures, which eMarketer has outlined and updated, the collapse in what YouTube is expected to enter for ads is impactful. eMarketer now believes they will hit $ 12.65 billion in advertising revenue in the US market by 2022. Earlier, I thought they were going to exceed that figure this year. His previous projections indicated that in 2020 YouTube would bill $ 12.75 billion. Now that number has become 9,060 million.

In 2021, the projection of a few months ago of 14,390 million dollars has disappeared. Now eMarketer estimates they will make $ 10.88 billion.

Less benefits and more weight for searches

And, of course, not only income has decreased, but also profits. In the US, the market that uses eMarketer as a scale, expected that it would have made a profit of $ 5.48 billion in 2019. It was $ 3.43 billion. To get closer to the expected figures, we must wait until 2021, when eMarketer now estimates that they will earn 5,210 million dollars (compared to the 7,110 that they expected before).

All this, as they explain in the analysis, also impacts the general numbers of Google. Because they have been overestimating YouTube results, they explain, they have been underestimating what they believed it was getting through other channels, such as search advertising.

And, much more problematic, the data could be even worse this year. The eMarketer projections corrections were made at the beginning of March, although they have been made public now, and do not take into account, the consultant recalls, the effects of the coronavirus.