Google Triples YouTube Ad Revenue, Thanks to Apple
Editor's note: A previous version of this article misstated how much of Google's sales YouTube accounted for last quarter. The Fool regrets the error.
The YouTube app was gone. On Aug. 6, 2012, MacRumors was one of the first to notice that Google's video-sharing app had been pulled from Apple's iOS. This wasn't the first Google app to be ousted. Its sudden disappearance followed the banishment of Google Maps. This seemed to be the beginning of the end for Google on iOS.
Boy, were we wrong.
YouTube ads propel mind-boggling revenue growth
Ever wonder what kind of revenue YouTube earns on mobile devices? Well, there's no need to guess. Google's Lucas Watson, vice president of sales at YouTube, sat down with Bloomberg and shared some numbers. "The commercial business has exploded," he said. "It's a huge part of our business, and we know that's where it's headed." YouTube's ad revenue has tripled over the last six months, contributing revenue of $350 million to YouTube in that period.
What's driving growth? As Bloomberg reported, "'The recent growth in usage follows Apple (AAPL)'s decision last year to drop YouTube as a core application in the iOS software for iPhones and iPads,' said Phil Farhi, director of product management at YouTube." Shortly, after Google launched a native YouTube app for the iPhone that supported ads, unlike the previously stocked version. The new app flourished, indicating a cause-and-effect relationship between Apple's decision to drop the app and YouTube's increased success on mobile.
A small piece of a bigger puzzle
To the extent YouTube can thank Apple, no one knows. Nevertheless, YouTube mobile is undoubtedly firing on all cylinders. YouTube app use is up 42% from a year ago, according to Nielsen.
These stats aren't much of a surprise for investors closely following YouTube, though. The video-sharing site has been a key focus for analysts covering Google stock. From the 1 billion monthly active users it announced in March to the explosive growth of video advertising as a whole, YouTube is crushing it.
If you're looking for another reason to buy Google or to hold shares, YouTube's jaw-dropping success in the very important mobile market should be added to your list. According to Martin Pyykkonen, an analyst from Wedge Partners, YouTube accounted for about 10% of Google's $14 billion in sales last quarter, with as much as 25% of YouTube revenues coming from mobile. Don't be surprised to see YouTube's growth begin to have a more meaningful effect on the company's overall revenue growth rates in the years to come.
As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.
According to Martin Pyykkonen, an analyst from Wedge Partners, YouTube accounted for about 10% of Google's $14 billion in sales last quarter, with as much as 25% of YouTube revenues coming from mobile.
The article Google Triples YouTube Ad Revenue, Thanks to Apple originally appeared on Fool.com.
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