YouTube U.S. ad revenue to cross $1 billion this year, EMarketer says

YouTube star Michelle Phan is photographed with her L'Oreal makeup line at Ipsy Studios in Santa Monica on July 14.
(Katie Falkenberg / Los Angeles Times)

U.S. advertising revenue for YouTube, the biggest Internet video website, could reach $1.13 billion in 2014, according to a report from research firm EMarketer.

That would be an increase of 39% from 2013, EMarketer said Thursday.

However, the research company estimated that YouTube’s share of the U.S. digital video advertising market will decline in the face of rising competition from companies including AOL and Yahoo, which are expanding their online video businesses.

This year, YouTube’s estimated market share could decline to 18.9%, compared with 21.2% in 2013, the report said.


Meanwhile, EMarketer said video ad revenue for AOL could increase 20% this year, thanks to more full-length shows, short-form videos and professionally produced programs that attract advertisers. AOL commissioned its first long-form series, “Connected,” in April.

Though Yahoo’s ad sales are currently in decline, they’re expected to grow in 2015, EMarketer said.

YouTube, which is owned by Google, declined to comment. Google does not break out financial details for YouTube in its regulatory filings.

A recent research report from Jefferies estimated that total revenue for YouTube would grow to $5.9 billion, up 50% from 2012. Jefferies analyst Brian Pitz estimated YouTube’s valuation at $26 billion to $40 billion, based on Google’s market cap.

YouTube says people watch 6 billion hours of its videos each month and that 80% of its traffic comes from outside the U.S.

Looking at the overall U.S. digital video ad market, EMarketer said it expects revenue to increase 56% this year to nearly $6 billion. That growth may taper off over the next few years, however, slowing to 13.9% in 2018, it said.


“One key factor holding back the digital video ad market ... is the fact that more and more digital video content is streamed through subscription services such as Netflix or Amazon Prime Video -- neither of which support advertising,” the firm said in its report.

It’s worth noting that traditional television advertising continues to dwarf online video’s sales. According to EMarketer, TV’s ad revenue will reach $68.5 billion in 2014.

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