YouTube strikes a blow to the marketing ecosystem!
YouTube generated $15 billion ad revenue in 2019, say reports. Open data sources such as App Annie show that about $1 billion of this revenue comes from YouTube’s premium services.
By the way, YouTube does not share information regarding how much revenue it generates from Android devices. As you all know, since Google has shares being traded on the stock exchange, it was disclosing the revenue of its parent company Alphabet; however, it wasn’t sharing the revenue details of YouTube to prevent the analytics platforms, such as App Annie, Sensor Tower, from estimating revenues. That’s why we can’t see YouTube among the ‘Top Grossing’ apps on Google Play. Since it can be considered as ‘taking advantage of one’s domination’, this matter deserves a separate discussion. 😊
As you see, YouTube has dealt a blow to the marketing ecosystem. How so? Millions of YouTube Premium users who have a habit of making frequent purchases cannot see ads anymore! I estimate that it incurred a market loss of $4 billion in 2019 alone. This amount will increase incrementally, and it is a huge loss for the ecosystem.
Let me give an example to explain it more clearly. Millions of YouTube Premium users do not see a marketing campaign you spend $100 on and expect to earn $500 in return!
It’s important to know that although billions of people have access to the internet, the estimated number of ‘users who have a habit of frequently making purchases’ doesn’t exceed 200 million. In other words, 200 million people sustain the ecosystem −I’m also planning to write an article about ‘users who have a habit of frequently making purchases’. The fact that 50 of 200 million people don’t see ads on a large platform like YouTube means the ecosystem will suffer from great losses in the future.
In order to see how horrible the big picture is, imagine Facebook, Instagram, YouTube, Google services, Snapchat and many others are adopting a business model based on a premium subscription!
Furthermore, the fact that a large platform like YouTube is selling subscriptions just for an ad-free experience and the ability to play videos in background for a higher fee than those of Netflix and Spotify should also be discussed.
As you may know, the USA is the country where the rate of users with the habit of purchasing is the highest. Although it seems things are going well for YouTube in the U.S. market, user habits are different in, for example, Turkish and European markets. To sum up, the price/performance ratio is low.
We will keep following Google’s strategies in this matter closely.
