00:00In terms of the YouTube ads revenue, $9.8 billion. What was anticipated was $9.56 billion.
00:06And we saw from Netflix's report as well that YouTube is the one thing that it stands in its
00:11way from being the dominant player in the streaming business as well. Talk a little bit
00:15about YouTube's ad outlook here, especially as we question whether there's going to be any kind
00:22of pullback in the economy down the road. Yeah, well, I don't think YouTube really
00:27competes with Netflix. I think for most people, I know they use both. In other words,
00:32that YouTube has a lot of short form content, mid form in terms of and Netflix are shows.
00:38They are big titles, new shows every week. It's professionally created. And so both can
00:45coexist and both do coexist. I think YouTube is obviously doing really well in terms of
00:52the number of hours spent on it. It's always ironically underperformed in terms of
00:57the revenue generated from it. Because those pre-roll ads just honestly don't perform
01:04that well. They don't have great retention, things like that. But despite that, YouTube
01:08continues to grow the revenue moderately, I think 13% year over year in this quarter.
01:13So it plays a role. It's nowhere near as important as a search business. And I don't think it threatens
01:20the streaming business, certainly not Netflix. It's just it's a compliment to the user in terms
01:25of how to consume content. Fair enough. Fair enough. Just to stay with the YouTube revenue
01:28for a little bit here. It sounds like they have a couple of levers they could pull though,
01:32if they wanted to increase monetization, certainly of those who do tune in.
01:36Yeah, well, the big thing to look at at YouTube, the customer base looks very different than the
01:41customer base for search. Where search has this enormous long tail of small advertisers,
01:49obviously big brands also. YouTube just simply doesn't. I mean, most of the brands you see
01:54on there are larger brands and more brand advertisers. And so can they increase monetization?
01:59I think they can. I wouldn't be betting on it as an investor. I feel like with YouTube just even
02:06broaden the conversation. Every quarter is like waiting. Is this the quarter where like something
02:13catches up to them? Does AI catch up to them? Does maybe YouTube advertising slow a bit more and
02:20things like that? And so you're kind of always on the edge of your seat right now. And I think that
02:24you're getting out of that mode is the biggest thing facing the company. And honestly, the biggest
02:29thing I think facing investors in Google is like getting out of that mode where what's going to happen
02:37this quarter? Is this going to be the quarter where reality catches up right now?
02:40Mark, the tech space advertising is the biggest contributor to its top line. Is that too much
02:45of a concentration risk? Does it need to do something about that to assuage investors?
02:49Yeah, I mean, I think that speaks exactly to what I was just referring to is so that obviously search
02:55continues to be vitally important to literally millions of businesses. And all of these business,
03:02Google has to somehow transition all of these companies onto their AI solution, and they have to do it
03:09flawlessly in order to not disappoint both their customers and then ultimately their investors.
03:15And so yeah, I mean, it's inevitable. It's still going to be text based ads in the form of AI ads. I
03:21mean, they could be audio like your AI is literally talking to Gemini is literally talking to you. But
03:27but it's it's just a huge risk. And I think they're showing that they're going to do whatever it takes to
03:33figure it out and to and not only survive, but to thrive. But it's going to require flawless execution.
03:39Well, they certainly have allocated more to CapEx than investors were anticipating. So maybe some of that CapEx is going to go towards these kinds of innovations, let's say. But Mark, when it comes to the cycle of digital advertising spend,
03:54who's spending the dollar is right now? Where are we in that cycle? And who's spending most?
04:00Yeah, I think it was so right now, it's kind of business as usual, I don't know, one's kind of pulling back or aggressively moving forward. So that that's a good state to be in for the whole market. For Google for meta, you know, it might come a mountain. I mean, it's the it's a small midsize advertisers that dominate the where the money is spent. And so the big brand advertisers, they don't increase their budgets much, whereas smaller midsize business, they increase their budgets,
04:29essentially at the rate they grow. And so Google, that's who Google's catered to, they built that market, Google essentially invented digital advertising. And so or at least, you know, made it as big as it is today. And so those customers are spending, they want to grow 2025 started rocky, it's looking great, like a great year. And they are spending heavily brand advertisers are just steady state and like they're not pulling back. So nothing to worry about there.
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