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  • YouTube Dominating Online Video Ad Business; $1.3 Billion Forecast in 2011

    A new report this week from Citi analyst Mark Mahaney forecasted that YouTube revenue could exceed $1.3 billion in 2011 and rise to almost $1.7 billion in 2012 (see below). Mahaney's conclusion is based on YouTube driving higher video views and an improved ability to monetize these views with advertising.  Google has of course been famously tight-lipped about YouTube's financial condition, other than to issue increasingly optimistic statements in its quarterly earnings calls.

    To put Mahaney's forecast into context, a December 2010 online video advertising forecast from eMarketer pegged the whole online video industry's ad revenue at $1.97 billion in 2011, meaning YouTube alone could account for approximately 65% of the entire industry's revenue (granted it's dicey to mesh numbers from two different forecasts).

    Regardless of the exact amount YouTube will generate or its specific share, the larger point is that YouTube is starting to fire on all cylinders, including generating big bucks from its home page ads from major brands. Almost two years ago I got all kinds of grief for suggesting it actually didn't matter how much money YouTube was losing at the time because it was such an enormously strategic asset for Google. That's now coming to pass.

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