Valued separately from the rest of Google’s business on the whole, YouTube could be worth $40 billion, potentially more than Twitter, per a Jefferies report released today. The analysis studied YouTube as a top platform for the growth of digital advertising, which is predicted to be a $17 billion market in the U.S. by 2017. It reflects that YouTube’s video ad sales will leap to $8.9 billion in 2016 from the $5.9 billion approximate spend this year.
In the report, Jefferies analysts state, “With the most viewership by a wide margin (1 billion-plus people each month), the best ad-tech stack, improving content, ubiquity of service (including new extensions into the living room TV) and the skippable TrueView ad format, YouTube makes Google a top pick.”
It is noted that Google divides half of YouTube’s ad revenue with whoever supplies content to the site; but even after that, YouTube’s share of the ad revenue will increase 48 percent this year from last year, at $2.8 billion. It follows that in 2015, YouTube’s cut should be $3.5 billion.
Google Preferred, a new advertising program that matches brands to premium video ad inventory, is emphasized in the report, as it includes the top 5 percent of YouTube content.
Still, there’s big competition for YouTube and its parent company, Google. Facebook, Twitter and Buzzfeed are developing video ad capabilities, along with longstanding Internet brands, AOL and Yahoo.
Back in 2006, some questioned whether the $1.26 billion price tag was too steep when Google acquired YouTube while it was making no revenue. Now, the purchase is a clear bargain for Google as it becomes inundated with advertisers and YouTube stars crossover to the mainstream.
The Jefferies report positioned YouTube’s worth between $26 billion and $40 billion, so it could surpass Twitter’s current value of $30 billion. For the first time, Facebook reached $200 billion in value today.
Meanwhile, Google overall is worth $400 billion.