YouTube’s Brief Outage Focuses Attention On Its Growing Commerce Role

YouTube

YouTube was temporarily down today as part of an outage at Google.

Google’s massive outage on Monday (Dec. 14) showed not only how much the world relies on services like Gmail, but also spotlighted the company’s YouTube video-sharing service as a global advertising and entertainment medium.

Although Google restored YouTube’s services after about an hour, that was long enough for the hashtag #YouTubeDOWN to generate tons of tweets from alarmed users. It also quickly spawned memes about the service’s outage, from pictures of the world catching fire to Homer Simpson wearing a sandwich board reading “The End Is Near.”

“TODAY I AM [IN] SHOCK,” one distressed user wrote.

Such concerns aren’t surprising, given that YouTube is the world’s second-most popular website, trailing only Google itself. YouTube boasts an amazing two billion active monthly users who watch more than one billion videos per day. The site has more than 31 million channels, and the average mobile user watches 40 minutes of videos per session.

“People come to YouTube for entertainment, information and opportunities to learn something new,” Sundar Pichai, CEO of YouTube and Google parent Alphabet, said recently during the company’s third-quarter earnings call. “As a sign of the times, views of guided meditation videos are up 40 percent since mid-March, while DIY face mask tutorials have been viewed over one billion times.”

He added that YouTube has seen its subscriptions grow to more than 30 million Music and premium paid subscribers – even topping 35 million when including consumers on free trials. Pichai also said YouTube TV has more than three million paid subscribers.

Alphabet recently reported that YouTube’s ad revenues shot up 32.4 percent to $5.04 billion during Q3, up from $3.8 billion a year earlier. The company doesn’t break out YouTube’s subscription revenues separately, but the “Other Revenues” category that includes those funds rose 35 percent year on year to $5.5 billion.

Chief Financial Officer Ruth Porat said during the company’s latest earnings call that the gains were “primarily driven by growth in [Google Play] and YouTube non-advertising revenues” like subscriptions.

Porat and Pichai said they see YouTube’s biggest role as a “mid-funnel” advertising play that companies can use to build up a brand’s identity, complementing Google Search’s role in attracting consumers who are looking to make immediate purchases.

“Search captures the intent at the moment,” Pichai said during the analyst call. “But [I] would say YouTube is an important platform for eCommerce as well. I can see advertisers in YouTube at the mid-funnel level – even if that’s not the intent at that moment – investing to create demand, create interest and so on. So for us, we see commerce working across the platform, and I think that’s an opportunity.”

And analysts are certainly noticing, with four of the 10 questions Pichai and Porat fielded during the earnings call focused on YouTube.

Pichai thinks the platform’s potential for advertising and commerce will only expand for both merchants and Alphabet as YouTube continues to grow.

“On shopping on YouTube, [I’d] definitely say we are on the earlier part of the journey,” he said. “But we have seen the strength in YouTube for direct response and on a few other categories. And I think the experiences we see there [can] directly carry over to commerce. … There is a lot of commercial activity on YouTube organically, and so I see it as a long-term opportunity.”

Read More On YouTube: