Google: YouTube mobile ad sales tripled over last six months
Google's (NASDAQ:GOOG) YouTube video unit has tripled its mobile advertising sales over the last six months, YouTube Vice President of Sales Lucas Watson told Bloomberg.
"The commercial business has exploded," Watson said. "It's a huge part of our business, and we know that's where it's headed." He added that YouTube is taking steps to make it easier for advertisers to run ads inside the company's mobile applications, giving them the option to automatically split airtime between mobile devices and the desktop. Marketers may also opt out of multiscreen advertising, Watson said.
YouTube generates about 10 percent of Google's total annual revenues, according to an estimate by Wedge Partners analyst Martin Pyykkonen. Based on Google's $14 billion in sales in the latest quarter as well as Pyykkonen's estimate that mobile contributes between 20 percent to 25 percent to YouTube's bottom line, Bloomberg believes that mobile video ads now drive as much as $350 million in annual sales.
Mobile video ad sales across the U.S. are forecasted to reach $2.69 billion in 2017, increasing more than tenfold from 2012, according to eMarketer. The challenge is keeping consumers engaged, Forrester Research analyst Julie Ask told Bloomberg. "People have less patience on the phone; consumers have become more task-oriented," she said. "The ads have to be entertaining, and there's a higher bar to some extent."
Roughly one quarter of YouTube's 1 billion worldwide users now access the service via mobile device, Watson said. Nielsen reports that more than 70 million U.S. smartphone owners accessed YouTube in March 2013, up 42 percent year-over-year.
Google is also exploring other opportunities to monetize YouTube: Last month, it unveiled its long-anticipated YouTube paid channels pilot program, enabling content creators to offer premium video efforts across a range of digital platforms. Thirty media partners are participating in the program, launching 50 paid YouTube subscription channels priced at a minimum of 99 cents per month. Channel creators will retain more than 50 percent of revenues while YouTube collects the rest, similar to arrangements that exist for sharing the video platform's ad revenues.
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