YouTube ad growth slows despite $40.4 billion advertising business

MUMBAI: The play button is still winning but the fast-forward button belongs to the competition. YouTube may remain one of the world’s largest advertising platforms, but as rivals race ahead in short-form video and streaming, the Google-owned giant is entering a new phase where keeping advertisers engaged is becoming as important as keeping viewers hooked.

According to a WARC Media report, YouTube generated more than $60 billion in total revenue during 2025, including over $40.4 billion from advertising, reinforcing its position as one of the world’s most influential media platforms and a serious challenger to traditional television.

However, the platform’s advertising momentum is beginning to ease. Global ad revenue grew 11.7 per cent in 2025, down from 14.7 per cent growth in 2024. WARC expects the slowdown to continue, forecasting 7 per cent growth to $43.2 billion in 2026, followed by 7.9 per cent growth to $46.6 billion in 2027.

The moderation reflects both YouTube’s maturity and intensifying competition. While the platform dominates long-form online video, marketers increasingly see TikTok as a stronger performer for lower-funnel, direct-response advertising. WARC estimates TikTok’s advertising business could surpass YouTube’s by 2028, while Netflix’s ad-supported tier is also expected to attract greater advertiser investment over the next 18 months.

Despite the slower commercial growth, audience engagement continues to strengthen. YouTube maintained a monthly audience of around 2.6 billion users globally in 2025, while average daily viewing time increased to 58 minutes, up from 48 minutes a year earlier.

India remains YouTube’s largest market with 500 million users, followed by the United States with 254 million. The 25–34 age group continues to dominate the platform, accounting for 21.7 per cent of its global audience.

Viewing habits are also shifting rapidly. Connected TV (CTV) has emerged as YouTube’s fastest-growing screen, accounting for 45 per cent of total watch time in the United States, with video completion rates exceeding 95 per cent. At the same time, YouTube Shorts has become a powerhouse in its own right, attracting more than 200 billion daily views worldwide.

The report notes that in major markets such as the United States, Shorts now generates higher revenue per watch hour than traditional in-stream video, although sustained growth will depend on advertisers adapting creative strategies for short-form content.

For marketers, YouTube remains a preferred destination. WARC ranked it as the world’s most trusted and preferred media brand among advertisers for the third consecutive year. The platform is also proving particularly influential with younger audiences, with 51 per cent of Gen Z men and 43 per cent of Gen Z women reporting they had made a purchase after watching an advertisement on Youtube Shorts.

Beyond advertising, YouTube is broadening its influence across digital media. The platform has overtaken Spotify for podcast viewing, recording more than 700 million hours of podcast consumption on television screens every month. It has also surpassed Reddit as the leading social platform used as a source for training large language models, underlining its growing strategic importance in the AI ecosystem.

For YouTube, the challenge is no longer attracting viewers, it already has billions. The next battle is convincing advertisers that, in a world increasingly shaped by short-form video and AI-driven media, the biggest screen can still deliver the biggest returns.