How advertisers are approaching YouTube Shorts

Like America’s attention span, videos on social platforms are getting shorter. After TikTok’s explosive growth, both Meta and Google introduced short-form video products aimed at copying capturing the endless scroll (and ad dollars) from the controversial platform.

Instagram’s pivot to Reels has been well-documented (and plenty criticized). Less explored is Google’s YouTube Shorts, which rolled out in more than 100 countries last summer. During its Q3 earnings call this fall, Google executives shared that Shorts had 1.5 billion logged-in viewers every month, totaling 30 billion daily views. As of last fall, TikTok reported having more than a billion monthly users.

“Engagement is strong. We’ve always said that we focus on building great user and creator experiences first and then follow that with monetization over time,” Philipp Schindler, Google’s chief business officer, told investors.

Google started running ads on Shorts globally in May, but they haven’t yet blown away the bottom line. “We continued to experience a slight headwind to revenues as Shorts viewership grew as a percentage of total YouTube watch time,” Schindler said on the call. “We’re focused on closing the monetization gap between Shorts and long-form content on YouTube over time.”

So far, Google gets less per impression for Shorts than it does with traditional YouTube pre-roll ads, according to Eric Seufert, a mobile marketing analyst and author of the blog Mobile Dev Memo. “The Shorts format just monetizes worse than the other formats. Part of that is because it’s a new format and the others are just a known quantity,” he said.

FWIW, TikTok is expected to make nearly $10 billion in ad revenue in 2022, according to Insider Intelligence. For reference, YouTube made about $7 billion in the third quarter of 2022, and that was a miss.

Currently, advertisers can only buy ads on YouTube Shorts by running video action, app install, performance max, or discovery campaigns, which allocate spend across various YouTube and Google inventory. In September, YouTube said that it will begin sharing ad revenue with Shorts creators starting next year.

Coming up short

Emily Johannes, a senior programmatic media manager at the agency PMG, which has bought ad inventory on Shorts, described it as “really rudimentary” and hard to benchmark without “anything to compare it against” because the agency hadn’t tested it enough.

“It’s not exactly reinventing the wheel. It is largely the same as TikTok. I think that a lot of the other social platforms are interested in [short-form video] because clearly it’s working,” she told Marketing Brew. Still, she isn’t yet recommending it, especially given the economic climate, where “brands may be facing some challenges,” like thinner budgets, leaving less room for experimentation. “I don’t want their creative teams to overextend and build creative that’s custom to Shorts content when there’s no promise of delivery.”

Eric Perko, founder of the media agency Apollo Partners, which hasn’t yet tested Shorts, also pointed to the economic environment, telling Marketing Brew that “new channels aren’t going to be spun out when your budget is being reduced.”

“Short-form video content is already fairly saturated…I don’t think that [short-form content] is why people are coming to YouTube,” he said.

Mohammad Haque, SVP, group director of SEM at Mediahub, explained that because YouTube Shorts is so different from the traditional YouTube experience—a six-second video is different than, say, a 10-minute documentary—and because he’s buying bundled inventory, it isn’t clear which creative works best on the platform or how much of that inventory “is served on YouTube Shorts.” Advertisers can filter for mobile users, but still can’t buy Shorts directly, he said.

“The creative experience is very different on YouTube Shorts…the type of ad experience you serve has to fit the type of user experience and mindset,” he said, explaining that “it limits [the agency’s] ability…to get a better insight” comparing Shorts advertising to regular YouTube ads.

Still, he’s somewhat bullish on the product and pointed to Google’s track record. “I’m pretty confident; they’ve already got traction. It’s YouTube…I think they have tons of foundation to build this thing further.”