On today’s podcast episode, we discuss the main reasons YouTube is the most watched platform on TVs, how “Planet YouTube’s” gravitational pull is disrupting other media types, and what the biggest threat to its dominance is. Join Senior Director of Podcasts and host Marcus Johnson, Vice President and Principal Analyst Jasmine Enberg, and Principal Analyst Bill Fisher for the conversation. Listen everywhere and watch on YouTube and Spotify.

Report - YouTube for Marketers Explainer

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Transcript

Marcus Johnson:

Hey gang, it's Friday, April 7th. Bill, Jasmine, and listeners, welcome to Behind the Numbers: an eMarketer video podcast. I'm Marcus, and today we'll be discussing YouTube. Join me for that conversation. We have two people. Let's meet them. We start with our principal analyst covering the UK based in a charming little seaside town on the south coast of England. It's Bill Fisher.

Bill Fisher:

Hi Marcus. Hello everybody.

Marcus Johnson:

Hello there. We're also joined by principal analyst and VP based in California where the beaches just aren't quite as nice as England's. It's Jasmine Enberg.

Jasmine Enberg:

Hey Marcus. Hey everyone.

Marcus Johnson:

Hello. Today's fact. Is it better to be an early bird or a night owl? So this one economist article was questioning. Jasmine I know gets up very early. Bill, where do you land?

Bill Fisher:

Early bird catches the worm.

Marcus Johnson:

As well. Two of the worst people. Okay. Apparently we don't have a choice what we are. We're actually born as one or the other. Sometimes we're somewhere on the scale and we're stuck with it for life. A person's chronotype, which is what scientists call it, is largely a product of our genes, so it's very hard to try to become one or the other. One episode of NPR's podcast Morning Edition explains that your body's circadian rhythm decides whether you're an early bird or a night owl, saying the body is an orchestra of organs, each providing an essential function. In this metaphor, the circadian rhythm is the conductor. Most folks, about 30 to 50% land in the middle of the chronotype bell curve, sleeping from 11 PM to 7 AM, according to the American Sleep Association. And the other 40% are either slightly morning people, slightly evening people, off by an hour or so, one way or another. And then you have folks at the extremes as well.

Jasmine Enberg:

I'm assuming Marcus, you're a night owl based on the way that you presented this.

Marcus Johnson:

Absolutely, yeah. The best of us are. Science and health editor for Vox, Brian Resnick explains that if we try to live out of sync with these clocks, our health likely suffers. The mismatch between internal time and real world time has been linked to heart disease, obesity, and depression. So be yourself. Always good advice.

Jasmine Enberg:

Love that.

Bill Fisher:

I've heard this. It's the Industrial Revolution that screwed us up, right?

Marcus Johnson:

Oh, tell us.

Bill Fisher:

Well, it's forced us into this artificial work day. I mean, prior to that-

Marcus Johnson:

Oh, of nine to five. Very interesting.

Bill Fisher:

Yeah, the hunters woke up early and did the hunting. That's you and I, Jasmine. And the other guys like you, Marcus, you just sat back and waited for us to bring the food.

Marcus Johnson:

And you're late, by the way.

Jasmine Enberg:

I have to say though, my sleeping and wake up time habits have changed over time. I think part of the reason I wake up so early is just a function of the fact that I live in LA and I'm three hours behind New York, so by the time it's 6 AM here, it's already 9 AM in New York, and then you kind of just get used to it.

Marcus Johnson:

See, this is another reason to move to England where the beaches are so much better. Anyway, today's real topic-

Jasmine Enberg:

Honestly, today they probably are. It's raining in LA. I know.

Marcus Johnson:

Yuck. Bill, any different there? Of course not.

Bill Fisher:

It's beautiful. 20 degrees, sun. Lovely.

Marcus Johnson:

That's a lie.

Bill Fisher:

It's not. It's true.

Marcus Johnson:

That's not remotely true. Is it really?

Bill Fisher:

Yeah, we're having a mini heat wave.

Marcus Johnson:

All right, we'll fact check that later. April. Today's real topic, YouTube turns 20. What's next? On Valentine's Day, YouTube turns 20 years old. As Taylor Haney of NPR explains, three former PayPal employees launched YouTube.com two decades ago. Originally intended as a dating website, he explains that the co-founders, Steve Chen, Chad Hurley, and Jawed Karim struggled to attract users, so they created YouTube's first video themselves titled Me at the Zoo. It wasn't long before the platform exploded in popularity. In 2014, an economist's article noted that folks had spent 140 million hours watching Gangnam Style, just one video, the most popular video at the time. The piece noted that with that time, 140 million hours, humanity could have built 20 Empire State buildings, six Burj Khalifas, the world's tallest building, or another one and a half Wikipedias. But instead, we watched that video. Fast-forward to today, and YouTube just became the world's most watched platform on televisions.

As February, YouTube captured close to 12% of all TV viewing, all of it, streaming and traditional combined, with folks spending more time on the platform than people spend with all of the former, number one Disney company's properties. So Disney plus, Hulu, ESPN plus, all of Disney's legacy channels, ABC, ESPN, and others. YouTube is watched more than all of those combined on televisions. This milestone marks a 50% increase in YouTube share from two years ago and reinforces the platform's growing prominence on the biggest screen in our homes, our colleague Jeremy Goldman writes.

Bill, I'll start with you because you've been working on some YouTube research for us, YouTube and marketers. What do you think has contributed to this milestone the most, YouTube being the most watched platform on televisions?

Bill Fisher:

I think we need to take a look at demographic groups. We often look at the youngest groups to sort of map what might happen in future, and a lot of the research that we see is that younger generations have grown up with YouTube. I certainly saw that with my children as they were growing up. I didn't get to use my TV for a good number of years because they were in front of the biggest screen in the house watching YouTube on that screen. This is kind of a model behavior that then they take through to adolescence and likely into adulthood. My eldest son, he's now 17 and he's a big YouTube user. He uses it differently than he did as a kid, but he still views YouTube as an entry point into the TV set. And as I say, a lot of the stats bear this out that kids see the TV or see YouTube as just another TV channel.

Marcus Johnson:

Yeah, that's also, it's changing somewhat because it was kids who got us to this point, but it feels like they've handed the baton to over 65-year-olds and older folks have driven a lot of the recent growth. Over 65-year-olds nearly doubled their YouTube consumption in the past two years, now rivaling that of kids. So we did see it with the young folks and now it's become a habit of a lot of people. Because we've seen it with the younger folks, Jasmine, YouTube seems to resonate particularly well with them. There was one point I was reading about saying content and social platforms just holds a greater relevance for Gen Z and Millennials. There was a Deloitte study found 56% of Gen Z's and 43% of Millennials find social media content more relevant than traditional TV shows and movies. Roughly half feel a stronger personal connection to social media creators than to TV personalities or actors.

Jasmine Enberg:

I saw that same study and it was shocking, but not surprising to see really how well social media content is resonating with younger users. And I think that that has really helped propel YouTube. I think there's also, when you're thinking about YouTube, it's kind of in a league of its own. It has everything. It has everything from premium content or traditionally premium content to creator content to clips of movies, clips of different videos to music. And so there's kind of a little bit of something for everybody and I think that that has been a huge growth driver and there really isn't any other platform that can match that in terms of the scope and the scale that it has. But to your point about the social media content resonating more with younger users, what I think has happened is that there has been a really big shift in what people, young people consider to be "premium content."

And so it's not necessarily that they don't like studio content anymore, it's just not reflecting them and the things that they want to watch in the same way that social media creator content is, they want to see things that are culturally relevant that are engaging in different ways and for them, creators are the new celebrities. I mean, if you talk to a teenager, they'll know who MrBeast is, but they won't know who Scarlett Johansson is, for example. And I use her whenever I talk about this because she still doesn't have social media. So I think there's just been a big shift in that perception that has helped propel YouTube as well.

Marcus Johnson:

Yeah, our colleague Jeremy Goldman is writing tech platforms are outpacing legacy media in engagement and personalization. You're talking about things that are culturally relevant and younger people wanting to stay up to date with those things, watch those things, hear about those things. He was saying, social media algorithms, especially YouTube's recommendation engine offer hyper tailored viewing experiences that subscription platforms struggle to match. So that's definitely helped.

Jasmine Enberg:

Yeah, that's such an important point because people who've grown up digitally expect the content that they're viewing to be tailored to them, and so they don't want to be through multiple different channels looking at things that really bear no relevance to what they want to be watching. When you look at a platform like YouTube, they're serving you content based on your interest and really curating that experience for you.

Marcus Johnson:

Yeah. It's also free.

Jasmine Enberg:

Yes.

Marcus Johnson:

I mean, I have to keep reminding myself that you can consume all of this content and it's free, and that is no more important than it is today because of inflationary climate, because of how people are trying to cut back on subscription platforms, having to pay for certain types of content. Jeremy was saying, YouTube's growth exposes a major vulnerability in the subscription based model. Deloitte's media report finding that nearly half of users now question whether they're getting enough value from pay streaming services, over 40% saying the content doesn't justify the cost and that share is increasing as well. So YouTube benefiting from that kind of backlash.

Bill Fisher:

It's not all free. Of course, YouTube does have its subscription models as well with YouTube TV and with YouTube Music, and it's interesting to see that... I mean, YouTube TV is seeing some success, but it's only available in the US. YouTube Music on the other hand, is struggling a little bit to eat into the leads that the Spotify's of the world have. I guess for the reasons that you mentioned that consumers are thinking, I can get a lot of this stuff for free anyway. It may not be the optimal experience, but I can get it for free. Why would I pay for it?

Marcus Johnson:

Yeah, so as a YouTube regular, which is what we're talking about here when we're talking about them being the most viewed platform on TVs. It's YouTube, the main app, but then to Bill's point, they also have YouTube TV, they've got YouTube Music, YouTube Premium. There's a YouTube Premium Lite version now as well. And so there are a lot of different flavors of YouTube, YouTube Kids. And Bill, in your recent report you explained this concept of planet YouTube, which I really like, and how the gravitational pull of the platform has disrupted other media types. Could you talk us through this planet YouTube concept in a bit more detail?

Bill Fisher:

Yeah, I mean you've summarized that quite well, so you've done a lot of the work for me, but this is the idea.

Marcus Johnson:

Oh yeah, early bird catches the worm. Unbelievable. Us night owls have a little bit going for us.

Bill Fisher:

Yeah, that's right. I do all the work and then you gain all the glory.

Marcus Johnson:

That's basically what happened. Yeah, sorry.

Bill Fisher:

So Jasmine shared with me actually a podcast on semaphore, I think it was Jasmine with YouTube CEO, Neal Mohan, and he was talking about a lot of the things that I'd written. It was quite fortunate actually. A lot of the things he was talking about resonated in the report. He spoke of all these different lanes that YouTube is in. I looked at it slightly differently and I put YouTube at the center of the media universe and called YouTube, planet YouTube and looked at all the media that are in its orbit and how it's been disrupting them over the years and continues to disrupt them. There are some media types that are being more disrupted or sort of in the near orbit as I described it. So podcasting is one example where I think recently YouTube in a PR release said that at the end of January they passed 1 billion monthly active podcast viewers, way more than any other platform. Obviously it's disrupting podcasting in a very significant way. It's forcing almost other platforms to pivot to video.

Jasmine Enberg:

The fact that you just said podcast viewers, I think already speaks to the disruption.

Bill Fisher:

Exactly. And then there are other media that are maybe not being disrupted quite as much yet. Live sport being an example that I put in the outer or wider orbit. There are some big disruptions happening. I mean in the US, live sports and the NFL deal that you'll tell me, Marcus, the Sunday ticket or something.

Marcus Johnson:

Sunday ticket.

Bill Fisher:

Sunday ticket. Elsewhere around the world though live sport is not being disrupted quite as much by YouTube, although with the Olympics that we had last year in Paris, a significant amount of viewing did happen on YouTube. But yeah, basically YouTube is so many things now than it used to be that it really does sit at the center of the media universe as we know it.

Marcus Johnson:

Olympics stat was stunning. 17% of the engagement for the Summer Olympics was on YouTube, was shockingly high. Nearly 20% of all the engagement for the Olympics was on that one platform, which is staggering. And it speaks to I guess how people are consuming the Olympics as well and clips and highlights and shorts, things like that.

Jasmine Enberg:

And it also speaks to how there's always this big discussion over whether digital platforms are going to replace TV. And I think in some ways, of course it already has. We talk about YouTube being the new TV for younger people, but there is also this symbiotic relationship. And so one of the reasons when we think about YouTube's growth, that it has been able to reach these heights is because you have entertainment providers also posting clips knowing that they're going to generate more engagement that way. And I don't remember the specific statistics, but there was evidence to show that you had people engaging with the Olympics on social platforms and then driving them to other streaming services to watch sort of full events. So there is this sort of interplay between all these platforms, even as you see YouTube in particular threatening more traditional media channels.

Marcus Johnson:

Using different platforms in different ways for different purposes. Bill, the sheer scale of YouTube, I think Jasmine used that word a second ago. It's just mind-blowing. In the report you talk about how much bigger they are than any other digital platform, 2.5 billion users around the world. They're significantly more than even Facebook and a lot more than TikTok and multiples more than Netflix and Spotify, and it's achieved [inaudible 00:16:44] scale, as you mentioned in the report, whilst being banned in China with 1.45 billion people in that country alone.

So there's people on the platform and also the time they're spending watching YouTube is significantly more than other streaming platforms. Americans spending 40% more time watching YouTube on a TV, [inaudible 00:17:12] gage than Netflix. But another way people spend more time watching YouTube on a TV than they spend watching Amazon Prime Video, The Roku Channel, Tubi, Peacock, Paramount Plus and Max combined. It's just a staggering amount of time people are spending on this platform. However, you note in the report, YouTube will account for just 2.5% of global digital ad revenues this year, ranking them 10th in terms of digital net ad revenues by company. Why the disconnect?

Bill Fisher:

It's important to say that's net ad revenue as I know Jasmine would want me to point out because its gross ad take is probably twice that, so it accounts for more like 5%, I think. But that's because of the amount of revenue that it shares with creators. So that sort of sets it apart from platforms like a Netflix where there's no revenue sharing with creators.

But that isn't to say that it still could be taking infinitely more, well, not infinitely more, but you know what I mean, a significant amount more in ad revenues than it does. I mean in the report, looking for some of the reasons why it might not have done quite as well, it hasn't had to, first of all, so Google its parent company has obviously got most of its revenues from its search business. YouTube, it's not been a vanity project, but it is maybe looked at YouTube less as a revenue driver and more as a media behemoth. But as its core business has been squeezed, the search landscape is changing significantly. It's now having to rely much more on YouTube. And I'm not saying it suddenly looked at it and thought, wow, look at this huge thing we've got. Let's try and do more with it. But it is being forced to do more with it because it has to. That's the first thing I'd say.

Another reason why perhaps it's struggled a little bit is its great strength over recent years is that it is a great many things. It is a podcast platform, it is a premium content platform, it's a social media platform, it's all these things. This jack of all trades mentality has perhaps caused a little bit of confusion amongst brands and advertisers as to how best to use the platform and get the most out of it.

Jasmine Enberg:

Yeah, I think Bill is spot on with both of those reasons. One of the things I always say is that the scale and the scope of YouTube has been both a benefit and a detriment. It's helped it to grow among consumers, but it has caused quite a bit of confusion with advertisers. Because every time I'm talking to brands, what I hear is that they're bucketing YouTube very differently. Some brands consider it to be digital video, for example, while other brands consider it to be social media, and so that can make it really difficult for them to figure out exactly how they should be advertising on that platform. Then you have other brands that are thinking that they can just port a TV ad directly into YouTube. And while technically you can do that because the nature of the content on YouTube is different, there's potential that those ads won't perform in the way that they might want and they need to kind of change those ads to put them more into YouTube's language and YouTube's culture.

And on top of that, I think the other piece, especially if you're thinking about it as digital video or comparing it to TV, there's a lot of brand safety concerns that have existed among advertisers as well. I mean, one of the reasons that we still see advertisers commit so much budget to linear TV, even though we know that there are better places a lot of times for them to be spending those ad dollars is because that's pre-programmed, it's predictable and it's somewhere where they feel comfortable and safe. And because YouTube is free, anyone can upload pretty much anything as long as it's within their content guidelines. There is that sense of unpredictability that can make it really difficult for marketers to wrap their heads around.

Marcus Johnson:

Yeah. Let's end with this. Bill, I'll go to you first. What's the biggest threat to YouTube's dominance?

Bill Fisher:

I think we've kind of touched on it there. It's still a great many things to great many different people. It's all very well reaching 2.5 billion people, but it still needs advertisers in order to be what it is. And if that confusion that Jasmine just spoke about continues to sort of reign, I mean there are signs that that's not going to be the case because its ad take is increasing at a significant clip-

Jasmine Enberg:

And now you have shorts too, which has been an entry point for a lot of advertisers.

Bill Fisher:

Yeah, I guess I still don't really know what YouTube is. I mean, it's lots of things, but that's still an issue I think.

Marcus Johnson:

Isn't it getting an update? It says it's going to be getting a refresh, a facelift in the next couple of months, so maybe that helps crystallize what it is to folks in their minds. So we'll see what comes out of that. Maybe that'll help people understand. Because I think it's supposed to get a Netflix kind of look, so if you want... I know you watch people streaming things, it's over here. If you want to subscribe to other platforms, which you can do through the platform, it's over here. If you want this type of content it's over there on this tile, so maybe they clean some of that up in the update.

Jasmine Enberg:

Well, that's on its CTV app, and a lot of that has to do with the fact that we're now seeing so much more viewing on CTV, and one of the biggest challenges that creators and viewers had was discovery. And so helping or allowing them to organize into seasons and episodes will make the app look more premium, more similar to say a Netflix or an Amazon Prime and then also potentially boost viewing. To your question about the threat though, I don't think there is a singular company that we can point to as YouTube's biggest threat. And I think that goes to Bill's kind of overarching point in this, in that YouTube is so many things to so many people, but what I do think could threaten YouTube's business, and I've been saying this for a couple of months now, is if they lose hold of the creator community that they've built.

And so they have been responsible or played a huge role in catapulting some of these household names. I mentioned MrBeast earlier, but he's a great example. But now we're also seeing them strike deals with premium streaming services like Netflix or Amazon Prime Video, and it's going to be very, very hard for these top name creators to resist those kinds of deals. And so YouTube needs to continue ensuring that it is creating a space not only for discovery but for monetization when you have all these other industry players now also competing for creators content to build in their libraries.

Marcus Johnson:

Yeah, I think that's a great point. There was a journal article talking about this, so I was going to ask you about that. How big of a deal do you think that... I mean, out of 10, how big of a deal is that? I mean, obviously MrBeast can create content for YouTube and can create content for this new show for Amazon Prime or the highest bidder, which ended up being Amazon Prime Video, but people only have so much time, and so if his content is now on two different platforms, they have to pick and choose where they watch that content. How big of an impact could losing some of those major creators, some of those major contracts, some of those major shows be?

Jasmine Enberg:

I mean, it's a huge deal, and I think if you think back to some of the comments that Netflix's CEO Ted Sarandos just gave a couple of days ago talking about how Netflix is actually a better place for monetization than YouTube is for creators. You can see just how intense this competition is and how important creators are to this overall entertainment ecosystem now.

There are only a handful of creators if you take out the kids space, that are going to be able to strike these kinds of deals with Netflix or Amazon or any of the other streaming services. So there's always going to be creator content on these platforms, meaning YouTube and other social networks. But it does need to keep ensuring, again, that it's a place where these creators are able to make money. And right now, YouTube is generally the number one social platform when you ask creators about where they monetize the best. I mean, they have the YouTube Partner Program, it shares ad revenues with those creators. Most of the other platforms don't, at least not in such a sustainable way, but there's still a lot of frustration among creators when it comes to even YouTube's Partner Program, and a lot of them don't find that their monthly income from that platform is sustainable or predictable, and that could lead them then of course to search for other revenue streams and other ways to distribute their content.

Marcus Johnson:

Well, that's where we have to leave the conversation for today, unfortunately. If you would like to read Bill's full report, it is called YouTube for Marketers Explainer. Contextualizing the $40 Billion Advertising Opportunity. Pro Plus subscribers can find it for free at emarketer.com. If you are like, "Don't make me wait, Marcus." Calm down. The link is in the show notes. That's all we have time for. Thank you so much to my guests, thank you to Bill.

Bill Fisher:

Thanks for having me, Marcus.

Marcus Johnson:

Thank you to Jasmine.

Jasmine Enberg:

Thank you for having me.

Marcus Johnson:

And thank you to the whole editing crew, Victoria, John, Lance, and Danny. Stuart who runs the team. Sophie does our social media. And thanks to everyone for listening into Behind the Numbers: an eMarketer video podcast. Tomorrow you can hang out with Rob Rubin on the The Banking & Payments Show, where he'll be discussing how young people bank, spend and invest their money.