Advertising on Google’s YouTube is seeing more brand advertising as the digital giant applies increasing AI-driven solutions.
Google reported better than expected revenue in the June quarter, jumping 14% to $US85 billion.
Advertising revenue hit $64.6 billion. Search was up 13.8% to $48.5 billion and YouTube was 13% higher at $8.66 billion
Search was led by growth in retail and by financial services. YouTube ads revenue was driven by growth in brand, as well as direct response.
Some analysts pointed to a slowing in growth by YouTube. Its results were about 3% lower than Wall Street estimates.
However, analysts at investment bank Jefferies called the results "solid" and YouTube ad revenue was within its own estimates.
They expect Google to grind higher in the second half of the year thanks to continued strength in core search and potential for Google Cloud to further accelerate on AI.
Google CFO Ruth Porat said the deceleration in YouTube’s revenue growth for the second quarter versus the first quarter reflects the tougher comparison versus the first quarter.
Google chief business officer Philipp Schindler wants to make YouTube the best place to create, watch and monetise.
“What sets YouTube apart from every other platform are the creators and the connection they have with their fans,” he told market analysts in a briefing.
“Audiences tuning in to watch their favourite creators continue to grow. For example, two weeks ago, MrBeast’s channel hit more than 300 million subscribers.”
CTV (connected TV) news have increased more than 130% in the last three years.
According to Nielsen, YouTube is the number one most-watched streaming platform on TV screens in the US for the 17th month in a row.
“When you look not just at streaming but at all media companies and their combined TV viewership, YouTube is the second most-watched after Disney,” said Schindler.
“And this growth is happening in multiple verticals, including Sports, which has seen CTV watchtime on YouTube grow 30% year over year.
“CTV on YouTube is continuing to benefit from a combination of strong watchtime growth, viewer and advertiser innovation, and a shift in brand advertising budgets from linear TV to YouTube.
“Our largest advertisers across verticals, including retail, entertainment, telco, and home and personal care are partnering with creators on ads and organic integrations.”
US telco Verizon worked with a YouTube creator to show the many ways their plans and offerings can be customised.
Using AI-powered formats, they created sketches in multiple lengths and orientations to serve the right creative to the right viewer and drive people to their site. Schindler said Verizon’s creator ads had a lower CPM and 38% higher conversion rate versus other ads.
Google has announced over 30 new ads features and products to leverage AI.
In the Merchant Centre, a product image can be uploaded, the AI prompted to “feature this product with the Paris skyline in the background,” and Product Studio will generate campaign-ready assets.
“I also hear great feedback from our customers on many of our other new AI-powered features,” said Schindler.
“We are beta testing virtual try-on in shopping ads, and plan to roll it out widely later this year. Feedback shows this feature gets 60% more high-quality views than other images and a higher click-out to retailer sites. Retailers love it because it drives purchasing decisions and fewer returns.
“Our AI-driven profit optimisation tools have been expanded to Performance Max and Standard Shopping campaigns. Advertisers who use profit optimisation in Smart Bidding see a 15% uplift in profit, on average, compared to revenue-only bidding.
“Demand Gen is rolling out to Display & Video 360 and Search Ads 360 in the coming months, with new generative image tools that create stunning, high-quality image assets for social marketers.”
Schindler gave the example of luxury jewellery retailer Tiffany, using Demand Gen during the holiday season, seeing a 2.5% brand lift in consideration and actions, such as adding items to carts and booking appointments. The campaign drove a 5.6 times more efficient cost-per-click compared to social media benchmarks.
Google’s own marketing team used Demand Gen to create nearly 4,500 ad variations for a Pixel 8 Campaign shown across YouTube, Discover and Gmail, delivering twice the click-through rate at nearly a quarter of the cost.
“In just six months, AI-driven improvements to quality, relevance and language understanding have improved Broad Match performance by 10% for advertisers using Smart Bidding,” he said.
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