TikTok, and to an extension Instagram Reels, significantly changed the way most users consume video content. Gone are the days when the majority of people would watch a 15-minute video from their favourite channel on YouTube.
The short-form video format made popular by TikTok, lasting anywhere from 15 seconds to 1 minute, took the industry by storm starting in 2020 while also being fuelled by the COVID-19 lockdowns as more people had time on their hands to create the short-form content.
The impact had to be significant for Google to notice and respond with their own platform for the short-form videos, YouTube Shorts. However, for the longest time, creators had no way to generate revenue from Shorts, and they only used the platform to funnel users into their regular YouTube videos which are monetized.
“We are experiencing a slight headwind to revenue growth as Shorts viewership grows as a percentage of total YouTube time,” Alphabet CFO Ruth Porat said.
This non-monetization on Shorts is, fortunately, coming to an end with the tech giant introducing advertisements in Shorts to a selection of users at first, before rolling it out to the rest of the world once they have sufficient feedback.
Philipp Schindler, Google’s Chief Business Officer relayed the news to investors this past week according to a report on Bloomberg. At the moment, Schindler says that they are primarily carrying tests involving ads for application installs, but they are also testing other ad formats to a lesser degree.
“While it’s still early days, we’re encouraged by initial advertiser feedback and results,” Philip Schindler said.
What is not clear is whether the ongoing advertising test on Shorts will give creators a share of revenue similar to AdSense on regular YouTube videos.
Google also confirmed that YouTube Shorts now has 30 billion daily views, which definitely sounds impressive at first, but you have to take into consideration the short nature of the videos, which means you can watch hundreds of videos in just an hour.
This short nature of the videos is also a negative when it comes to adverts. Most adverts on regular YouTube videos are between 5 seconds to 2 minutes. With the Shorts being less than a minute, it brings doubt whether people will sit through a 2-minute ad to watch a 10-second video.
This will likely limit the type of ads that are shown on Shorts, which will ultimately translate to Shorts paying a lower amount per a thousand views compared to regular YouTube videos.
This monetization problem on short-form videos also plagues TikTok creators, with a few of them complaining that they are paid a tiny amount compared to the number of views their videos are getting.
The revenue rate for TikTok is between Kshs 2 to Kshs 4 per a thousand views, which goes to show just how difficult it is to properly monetize short-form video in a way that both the platform and creators make enough money.
Whether Google cracks the code on properly monetizing the Shorts platform is a matter of waiting and seeing, as there is always the possibility that they go too hard, further pushing away users from their platform.