YouTube says it’s now testing ads on Shorts, its short video format. Google’s chief business officer, Philipp Schindler, told investors at the company’s earnings report that it is experimenting with app-install ads and other promotion.
“We are experiencing a slight headwind to revenue growth as Shorts viewership grows as a percentage of total YouTube time,” Alphabet CFO Ruth Porat said. “We are testing monetization on shorts, and early advertiser feedback and results are encouraging”.
Google claims YouTube Shorts is generating four times as many daily views as they were last year. Early this year, YouTube claimed 5 trillion all-time Shorts views. This shows how popular short-form video has become, and why every platform is now making it a focus.
Shorts advertisements will add another revenue stream to the option, which makes sense for YouTube because, while more people watching more Shorts videos is beneficial for the app overall, more time spent in Shorts also means less time spent on other, monetisable videos.
Shorts viewership is increasing as a percentage of total YouTube time, which Google acknowledged in its earnings call as “experiencing a slight headwind to revenue growth.
This means that YouTube must quickly monetise shorts in order to lessen the overall impact on earnings, while simultaneously creating new revenue streams for Shorts creators, as mid- and pre-roll advertising do not allow for direct monetization of short-form video snippets.
Vine, Instagram, Snapchat, and YouTube are all striving to solve this problem right now, and it adds a level of complexity to short video monetisation that Vine had to deal with back in the day.
They’ve primarily relied on specific creator financing pools, from which creators can subsequently receive an allotment of money share based on the success of their Shorts videos.
So far it’s not working out well for top creators who are already making significant, consistent money from YouTube and Twitch and who are acclimated to the established economics of online video streaming.
The danger is that, like with Vine, top creators would leave these platforms in search of more secure, profitable funding options if these platforms fail to provide them with reliable revenue streams. Which means they’ll end up on YouTube, which pays out billions of dollars to content creators every year.
Because Shorts views are growing so fast, YouTube is the largest threat to TikTok’s continued domination in the sector, even if TikTok appears to be nearly too big to fail at this level of the game.
But it could – Google says, “Over 40% of creators who received payment from the Shorts Fund in 2021 weren’t in the YouTube Partner Program.”
So many new creators are now being paid by YouTube for their Shorts video, and if YouTube can make it easier for them to get paid more frequently, they will undoubtedly continue with YouTube as their preferred choice.
With Ads in Shorts, YouTube has another revenue stream that it may use to reward creators or develop new revenue split models.
There is no single optimum approach to pay short-form creators, but YouTube’s system is considerably superior to others. Creating a more sustainable ad process is another step.
