Google: An Ad Crisis Looms from the Cancer of Short Videos
September 7, 2023
The weird orange newspaper ran a story which I found important. To read the article, you will need to pony up cash; I suggest you consider doing that. I want to highlight a couple of key points in the news story and offer a couple of observations.
An online advertising expert looks out his hospital window and asks, “I wonder if the cancer in my liver will be cured before the cancer is removed from my employer’s corporate body?” The answer may be, “Liver cancer can be has a five year survival rate between 13 to 43 percent (give or take a few percentage points).” Will the patient get back to Foosball and off-site meetings? Is that computer capable of displaying TikTok videos? Thanks, Mother MJ. No annoying red appeal this banners today.
The article “Shorts Risks Cannibalising Core YouTube Business, Say Senior Staff” contains an interesting (although one must take with a dollop of mustard and some Dead Sea salt):
Recent YouTube strategy meetings have discussed the risk that long-form videos, which produce more revenue for the company, are “dying out” as a format, according to these people.
I am suspicious of quotes from “these people.” Nevertheless, let’s assume that the concern at the Google is real like news from “these people.”
The idea is that Google has been asleep at the switch as TikTok (the China linked short video service) became a go-to destination for people seeking information. Yep, some young people search TikTok for information, not just tips on self-harm and body dysmorphia. Google’s reaction was slow and predictable: Me too me too me too. Thus, Google rolled out “Shorts,” a TikTok clone and began pushing it to its YouTube faithful.
The party was rolling along until “these people” sat down and looked at viewing time for longer videos and the ad revenue from shorter videos. Another red alert siren began spinning up.
The orange newspaper story asserted:
In October last year, YouTube reported its first-ever quarterly decline in ad revenue since the company started giving its performance separately in 2020. In the following two quarters, the platform reported further falls compared with the same periods the previous year.
With a decline in longer videos, the Google cannot insert as many ads. If people watch shorter videos, Google has reduced ad opportunities. Although Google would love to pump ads into 30 second videos, viewers (users) might decide to feed their habit elsewhere. And where one may ask? How about TikTok or the would be cage fighter’s Meta service?
Several observations:
- Any decline in ad revenue is a force multiplier at the Google. The costs of running the outfit are difficult to control. Google has not been the best outfit in the world in creating new, non ad revenue streams in the last 25 years. That original pay-to-play inspiration has had legs, but with age, knees and hips wear out. Googzilla is not as spry as it used to be and its bright idea department has not found sustainable new revenue able to make up for a decline in traditional Google ad revenue… yet.
- The cost of video is tough to weasel out of Google’s financial statements. The murky “cloud” makes it easy to shift some costs to the enabler of the magical artificial intelligence push at the company. In reality, video is a black hole of costs. Storage, bandwidth, legal compliance, creator hassles, and overhead translate to more ads. Long videos are one place to put ads every few minutes. But when the videos are short like those cutting shapes dance lessons, the “short” is a killer proposition.
- YouTube is a big deal. Depending on whose silly traffic estimates one believes, YouTube is as big a fish in terms of eyeballs as Google.com search. Google search is under fire from numerous directions. Prabhakar Raghavan has not mounted much of a defense to the criticisms directed at Google search’s genuine inability to deliver relevant search results. Now the YouTube ad money flow is drying up like streams near Moab.
Net net: YouTube has become a golden goose. But short videos are a cancer and who can make fois gras out of a cancerous liver?
Stephen E Arnold, September 7, 2023
Comments
-
- Subscribe to Beyond Search
Feature archive
News archive
-
