- YouTube may give Google a leg up in its battle with Facebook over supremacy in the digital advertising market.
- US consumers already spend more time watching YouTube videos than they spend on Facebook — and that lead is likely growing, Pivotal Research Group noted in a research report Tuesday.
- While YouTube has been dinged for hosting controversial and amateur videos, half of all the time consumers spend on the site is spent watching videos from the largest media companies, Wieser noted.
- Such data could make YouTube a more compelling place for national advertisers, he wrote.
In its battle with Facebook for consumers’ attention and advertisers’ dollars, Google may have a not-so-secret weapon — YouTube.
Collectively, US consumers already spend more time on YouTube than they do on Facebook, Brian Wieser, a financial analyst with Pivotal Research Group, reported in a research note Tuesday. And that gap seems likely to grow — while Facebook members are spending less time on the social network, people are spending more time watching YouTube videos, Wieser noted.
“Given YouTube’s relative scale … ongoing growth at these levels is a notable trend for the industry,” Wieser said.
Despite the bullish report, he maintained his “hold” rating on shares of Google parent company Alphabet and his $1,100 price target. In midday trading Tuesday, Alphabet’s stock was up $9.61, or about 1%, to $1,104.37.
US consumers spent about 4 billion hours on Facebook as of November, Wieser reported, citing the most recent data available from Nielsen. As Facebook itself reported in January, domestic usage of its site is falling, thanks in part to changes it’s made to its news feed that de-emphasize posts from news outlets and other organizations and promote those from users’ friends and family members.
By contrast, from August through February, US consumers 18 and older spent an average of 176 million hours a day — or 4.9 billion hours a month — watching YouTube on mobile devices, Wieser reported, citing data from Nielsen’s Digital Content Ratings Service. That’s already given YouTube a sizeable lead over the social networking giant in terms of the amount of time US consumers are collectively spending on the sites.
Consumers in the US spend billions of hours watching YouTube each month
But those figures underestimate YouTube’s advantage, because they don’t take into account all of the people who are tuning into its videos and all of the ways they are accessing the site, Wieser said. If you factor in viewers who are younger than 18 and people who are older than 18 that are watching YouTube on their smart TV’s or via media streamers such as Roku’s boxes, the total time US consumers spent on the streaming giant’s site was about 6 billion hours a month, he calculated.
And unlike Facebook’s viewership, YouTube’s is growing. The number of hours people spent on the video site grew consistently over the August-to-February period. If you look just at the 4.9 billion hour figure, that was up 29% from the same period a year earlier, Wieser said.
US consumers spend about 50 billion hours a month watching videos of all kinds on their personal devices, Wieser estimated. Viewers spend about 30 billion hours of that time watching videos that are ad-supported, like those on YouTube. Either way you look at it, though, the amount of time US consumers spend watching YouTube accounts for a double-digit percentage of their overall video viewership each month, Wieser said.
Videos from top media companies dominate YouTube
Advertisers have often held YouTube at arm’s length, because of the uneven quality of the videos on its site and the frequent presence of controversial ones. But Wieser suggested the company may have more success luring advertisers in the future.
If you look at the 74 largest companies in media, their videos accounted for about half of all viewership on YouTube, Wieser noted. Among the companies whose videos collectively attracted the largest viewership were Universal Music Group, Vevo, and Warner Music, each of which accounted for more than 3% of all YouTube views a month, he reported.
All of this could add up to an attractive case for the company to make to advertisers, he said.
“The relative scale of YouTube and its relatively high concentration of large publishers … whose content is either professional or semi-professional in nature is favorable for YouTube in terms of its capacity to represent itself as a substitute to traditional TV for national advertisers,” Wieser wrote.