YouTube Begins Initial Tests on Ads in Shorts

Google announced this week in its latest earnings report that it has begun an initial test of adverts appearing between YouTube Shorts videos, its TikTok-style short-form video stream.

Google also reports that Shorts currently garners over 30 billion daily views. That's a big jump from the 5 trillion all-time Shorts views recorded by YouTube in February, demonstrating the growing appeal of short-form content and why every platform is putting it front and center.

Shorts advertisements will give another income channel for the feature, which is an important factor to consider for YouTube because, although more users viewing more Shorts content is excellent, more time consumed in Shorts equally implies lesser time spent with the app's other, monetizable videos.

In its earnings call, Google mentioned that Shorts viewing is growing as a percentage of total YouTube time and that it is causing a "slight headwind to revenue growth."

Hence, to mitigate its effect on overall revenues, YouTube needs to monetize shorts as soon as possible, while also establishing new avenues for Shorts creators to optimize their earnings potential, as mid and pre-roll advertising are unsuitable for short-form video clips.

This puts a layer of complication on short video monetization, which Vine also struggled with in the past (and finally shut down), and which TikTok, Instagram, Snapchat, and YouTube are all striving to tackle right now.

Dedicated creator funding pools have been their primary strategy thus far, from which creators can receive a part of the fund based on the performance of their Shorts clips.

However, that also becomes an issue in itself, particularly with erratic payouts and shifting incentives causing frustration among top creators, several of whom already make significant, consistent incomes from YouTube and Twitch and are accustomed to the existing economics of online video streaming (which may be changing on Twitch as well).

The problem is that, if these platforms can't generate secure revenue streams for their top creators, they'll inevitably move to platforms that do. Which will surely bring them to YouTube, which gives out billions in the YouTube Partner Program to creators annually.

In this aspect, Shorts may serve as a secondary promotional channel for your main YouTube feed, wherein you can earn real money.

And with Shorts views growing at such a rapid pace, YouTube stands as the most significant threat to TikTok's continued domination in the sector, even though it appears that TikTok is almost too large to fail at this point.

But it might be possible, since Google also points out that:

“Over 40% of creators who received payment from the Shorts Fund in 2021 weren’t in the YouTube Partner Program.”

That's a lot of new voices getting rewarded by YouTube for their Shorts video, and if YouTube can make it easier for them to get paid more often, they'll certainly continue with YouTube as their primary platform.

Another component is Ads in Shorts, which provides another revenue stream for the feature, which YouTube can then reinvest in its creative funding process or invest in new revenue-sharing models.

No one has made a breakthrough regarding how to pay short-form creators in a way that is widely accepted, but YouTube's system is significantly more sophisticated than others.

Another phase in this growth is to create a more long-lasting advertising procedure.