Alphabet (GOOG) , the company that owns YouTube, has just warned of an upcoming change on the video sharing platform that users may not like.The company just revealed that a recent pilot that tested a new ad format on YouTube, where ads suddenly pop up when users pause a video, “drew strong traction” and may soon become the new norm. “For YouTube advertisers, increasing brand lift is one of the core goals,” said Alphabet Senior Vice President Philipp Schindler during a recent earnings call. “In Q1, we saw strong traction from the introduction of a pause ads pilot on connected TVs, a new non-interruptive ad format that appears when users pause their organic content. Initial results show that pause ads are driving strong brand lift results and are commanding premium pricing from advertisers.”Related: YouTube's crackdown on ad blockers just got more strictThe pilot was first announced in May last year alongside an unveiling of a new 30-second unskippable ad format on YouTube Select, which is a program that allows advertisers to place ads on popular videos. The move from YouTube to expand its rollout of ads on paused videos comes after it announced to users a week ago that it is tightening its restrictions on its crackdown on ad blockers, which began last year. YouTube is now blocking users from using third-party ad-blocking apps to watch videos on its website after limiting those with ad blockers to watch only three videos on its platform.“Viewers who are using these third-party apps may experience buffering issues or see the error 'The following content is not available on this app’ when trying to watch a video,” said YouTube in a community post announcing the change. “We want to emphasize that our terms don’t allow third-party apps to turn off ads because that prevents the creator from being rewarded for viewership, and Ads on YouTube help support creators and let billions of people around the world use the streaming service.”
In this photo illustration the logo of TikTok is displayed on a smartphone screen alongside that of that of YouTube, instant messaging software Whatsapp Facebook, Twitter, Instagram, Quora, Facebook Messenger and Snapchat on March 16, 2023 in Bath, England. Matt Cardy/Getty Images
YouTube’s crackdown on ad blockers and expansion of ads on its platform appears to be fattening up Alphabet’s earnings by billions of dollars.In Alphabet’s first-quarter earnings report for 2024, the company revealed that it earned roughly $8 billion from YouTube ads during the quarter, which is a significant increase from the $6.6 billion it earned during the same time period last year. The company’s revenue from Google subscriptions, platforms, and devices also increased 18% year-over-year, which Schindler states in the earnings call is mainly due to a “strong growth” in YouTube subscriptions, such as YouTube Premium, which allows users to watch content on its platform ad-free. Alphabet also saw a 15% increase in its overall revenue year-over-year, bringing in about $80.5 billion during the first quarter of 2024.Related: Veteran fund manager picks favorite stocks for 2024
