Covid will do to TV/digital video revenues what the great recession did to newspaper/digital media: accelerate the shift.
With Google and Snap reporting results, here’s a breakdown and summary of each major video platform:
In 2020, for the first time, Google broke out YouTube’s 2019 revenues: $15 billion. For context, this is how their peers stacked up.
Throughout 2020, quarterly revenues kept rising, from $4B in Q2 to $5B in Q3 (25% sequential growth is staggering at those levels), finally clocking in a breath taking $6.89B (up 46%) in Q4 alone. Adding it up that’s $19-20B in 2020 – the year of the pandemic.
During the year, Google Preferred was renamed YT Select, but the results remained stellar, as always – especially with programmatic continuing to eat away market share.
By reducing the minimum running time to enable mid-rolls from 10-minutes to 8-minutes, YouTube effectively opened up tremendous supply for marketers to serve more ads. Audiences have been conditioned to sit through “ad pods” in a TV-like environment (ironic given how revolutionary YouTube has been).
The reality for Facebook remains that video represents 5-10% of Facebook’s mammoth business. We had a breakthrough year in 2020 on the platform, but I’m personally unsure what Facebook Watch’s raison d’etre really is now and in the future vis-a-vis the Feed. I know what the original reason was, but Facebook could be much more potent in video, if it wanted to.
I’ve been bullish on Snap for years now. After launching as the ephemeral messaging service, Snap added filters and won over brands. Then via Discover, it created a brand-safe experience connecting audiences with marketers. After the first wave of high-profile content providers like NYT and Vice, WatchMojo joined in the second wave in late 2019. In 2020, we were cautiously bullish and Snap out-performed our expectations.
The launch of Snap’s ad marketplace stoked demand and lifted ad rates. Snap then benefitted from the Facebook ad boycott – as a more brand-safe option for CMOs – which explained the strong quarter they had in Q3. I am not surprised to see them having a solid Q4 and overall 2020, but cautioning over “disruptions.” Why/what does it mean?
Covid led to a pausing and scaling back in Q2, followed by a catch-up period in Q3/Q4 but that basically meant 2021 caught media planners/buyers off-guard. As YouTube moved from a pariah to the belle of the ball, marketers now have a decade of experience spending on the platform, who are comfortable and confident to commit their ad dollars to the Google ecosystem. Thus, while YouTube will also feel this Covid-planning-effect, it will be softer than what Snap will feel. This is why I tell people Q1 will look and feel more like 2019’s Q1, because 2020 Q1 started off very strong and then hit a wall on March 12 when the pandemic shelved everything.
The mid/long term effect is a massive net gain for GOOG/YT, FB, Snap, Twitter and TikTok… with YouTube and Snap arguably winning most.
Twitter: Missed opportunity, could have been bigger in live video. Not too late, but window is closing.
TikTok: Wild card.
Disclosure: own shares in all of the companies mentioned, except Tiktok.
Follow me on Clubhouse via CONTEXT handle, this weekend on Sunday Brendan Gahan and I chat about social video in years to come: https://www.joinclubhouse.com/event/MR655jRE and outline what each company can do to grow faster…