The meteoric rise of YouTube as a platform encapsulates the influence and tastes of Generation Y, or the millennial generation. While there is no precise date signaling the dawn of the millennial generation if you grew up online you are most certainly a member. It is no secret this cohort prefers to access media via the internet, whether it be streamed or downloaded, and are obsessed with their mobile devices. At the YouTube Brandcast event in New York this evening YouTube CEO Susan Wojcicki made an announcement that supports this commonly held belief.
According to Ms. Wojcicki YouTube reaches more 18-49 year olds via mobile devices alone than any TV network. At an event catered to advertisers this is a pretty big deal; the 18-49 demographic is what advertisers refer to as a “key demo” – the most lucrative demographic advertisers can target. While key demographics can shift based on the time of day, network, and type of programming young adult viewers have been TV advertisers’ target demographic for decades. In other words: not only is YouTube’s popularity growing at an alarming rate (when compared to last year the number of people visiting YouTube is up 40% and time spent on YouTube is up 50%), it is stealing TV’s bread and butter while it is at it.
Last year YouTube announced it reaches more people than TV networks in general. Ms. Wojcicki’s latest presentation highlights how YouTube is doing a far better job than traditional media at capitalizing on millennial’s love for streaming media and mobile devices. This is very significant as media consumption via smartphones is growing faster than any other device (includes TVs, game consoles, and PCs) according to a study released last year by international market research firm Nielsen.
This is also essential for Google’s advertising business as a whole. According to Google’s Q1 2015 earnings announcement advertising still makes up the bulk of its revenue. Although paid clicks increased by 13% when compared to the previous year the rate of this increase has declined over the past five quarters. What is more worrying is the decline in revenue generated by these clicks; Google’s revenue per click dropped 13% year-over-year. This is largely due to the fact that a greater proportion of paid clicks are coming from mobile devices, which Google can’t charge as much for. However, YouTube is a different story. Advertisers don’t care if a user is watching via a mobile device or on the desktop so long as the ads being served by Google are targeting users effectively and designed to work well on mobile. Although YouTube’s latest announcement might make TV networks and advertisers cringe it is certainly a boon for Google.