Two of Google’s major strategic focuses for YouTube – connected TV viewing and ultra-short form content — at a glance appear to pull the video giant in two different directions. As it seeks to fend off competition from the likes of TikTok and cater to audiences’ penchant for short, scrollable content, it’s been heavily pushing its Shorts platform to both viewers and creators. At the same time, it’s been working to capitalise on the growth of streaming and crack into TV budgets, traditionally associated with big budget long-form content.
YouTube obviously has the resources to pursue both of these strategies at the same time. But on Google’s earnings call following its Q4 results, executives revealed that there’s actually synergy between the two, as a significant amount of Shorts viewing is now happening on connected TV sets.
Philipp Schindler, SVP and chief business officer at Google, said that 15 percent of Shorts viewing in the US now takes place on CTV. As such, YouTube is working to make it easier for advertisers to run Shorts campaigns which run across all viewing devices. This itself could create its own challenges, as Google positions YouTube’s CTV inventory as part of advertisers’ TV buys.
Shorts closing the gap
Monetisation has always been one of YouTube’s big challenges when it comes to Shorts. Partly that’s due to the fact that it’s still a newer format, which advertisers have been testing rather than fully committing too.
But ultra-short form content also requires a different monetisation model from other types of video. Traditional pre-roll and mid-roll ads don’t work in vertical video feeds, where users quickly flick between short clips. Thus YouTube and other tech companies have had to figure out ways of working brands into the space which generate results for advertisers, without breaking the experience from a user perspective.
Over the last year, Google executives consistently mentioned that Shorts monetisation had been improving. And while Google isn’t releasing any solid revenue figures for Shorts, Philipp Schindler said that across 2024, the monetisation rate of Shorts relative to in-stream viewing increased by more than 30 percentage points in the US, with further progress expected this year.
Shorts’ growth on connected TVs could help with this monetisation push. CTV inventory generally commands higher rates than other video ad formats, and YouTube could allow advertisers to run more TV-like ad formats, potentially opening up new, bigger budgets for Shorts. However, part of CTV’s value comes from the quality of content and lean back viewing experience associated with TV – two values which won’t necessarily apply to Shorts content in the eyes of some advertisers. So YouTube will want to ensure that Shorts’ CTV growth doesn’t undo its efforts to position YouTube’s streaming inventory as part of the TV world.
CTV continues to grow
Outside of Shorts, YouTube’s CTV viewing continues to grow at pace. Nielsen’s data has consistently placed YouTube as the most watched streaming service on US TVs for over a year now. And Philipp Schindler says that viewers globally streamed over one billion hours of YouTube content daily on TVs last year.
Schindler suggested that the company has started to generate a virtuous cycle with CTV-oriented content, as creators have started prioritising more high-quality content designed for TV viewing, in response to YouTube’s living room growth. Schindler said the number of creators making the majority of their YouTube revenues on CTV was up 30 percent year-on-year in Q4. And this influx of made-for-TV content, in turn, pushes up YouTube’s CTV viewing further.
Google’s investments in AI could help on this front too. Schindler mentioned the release of Google’s text-to-video tool Veo 2, which he said will be made available to creators in YouTube in the coming months. As tools like Veo bring down the costs of making professional-looking content, a greater number of creators will be able to make TV-like content, which may help grow YouTube’s overall viewership on TV sets higher still.
