As YouTube Shorts reaches 200 billion views, advertisers increase their investment

Mark Ballard, research director at Tinuiti confirmed that the typical Tinuiti client buying YouTube Shorts inventory saw their spending increase a little over 11 percent from the first quarter to the second this year.

The same goes for Markacy’s clients. The agency’s director of media, Grant Kalfus, said his team is currently pushing YouTube – especially Shorts – across almost every client, and are on pace to roughly double their Shorts investment by year end. 

The math helps. 

“A big driver for us is that we’re constantly seeing CPMs around $5 on Shorts compared to around $10 to $12 on Meta’s Reels and TikTok,” he said. “So YouTube Shorts is an easy lever for efficient, incremental reach.”

The motivation to spend more on YouTube’s Shorts especially increased as Google rolled out new Demand Gen campaign options over the last several months, including the ability to isolate Shorts placements and produce standalone Shorts campaigns. 

In fact, it was one of the main reasons why some of Tinuiti’s clients hadn’t increased ad spending on Short-form only campaigns, according to the agency’s innovation and growth director, TV, audio and display, Brian Binder. 

“YouTube has [now]given advertisers control to exclusively target Shorts inventory across the four main products: Video Reach Campaigns, Video View Campaigns, Demand Gen and YouTube Select,” Binder said. “This is a big unlock for YouTube, allowing brands to seamlessly incorporate Shorts into their social strategies without the complexities of the broader YouTube ecosystem.”

Similarly, Sam Piliero, founder and head of growth at The Moonlighters agreed that this standalone option completely changed the game for advertiser adoption.

“We received full team enablement from Google, and any client with strong short-form video assets is now prioritizing Shorts,” he explained. “We’re seeing the lowest CPMs we’ve had in nearly five years using this method. As a result, ad spend toward Shorts has scaled aggressively for us, doubling or tripling quarter over quarter in some accounts.”

It’s a decent showing, but one that’s been a long-time coming. For all of YouTube’s scale, it’s taken time for Shorts to win over advertisers. 

After ditching its YouTube Shorts Fund in 2022 and introducing an ad revenue share model in February 2023 via the YouTube Partner Program, Google has spent the last couple of years laying the foundations for Shorts to be a contender for the ad dollars flowing into short-form video.

Creators have been provided with additional income options for Shorts (tipping, known as Super Thanks and product affiliate tags). With the TikTok ban still uncertain, earlier this year creators were also encouraging their followers to follow them elsewhere across Instagram Reels and Shorts, plus the option to now view Shorts on TV screens has further increased viewership of the format.

Added to that, YouTube has improved its video editor, provided template enhancements as well as an image-to-video AI tool – all of which aim to make Shorts creation more accessible and flexible to both creators and brands.

It’s a shift from earlier this year when Shorts was largely positioned as a hedge against TikTok’s regulatory uncertainty in the U.S. 

“In recent conversations with Google, it’s clear they’re wanting to get more and more advertisers to invest in Shorts,” said Shamsul Chowdhury, global evp of paid social at Jellyfish. “They’re saying if clients are on Reels or TikTok, here are examples of how we can replicate that brand momentum on Shorts.” 

The Moonlighters’ Piliero said that in several cases, his team was granted early access and received ad credits to participate in the beta, on behalf of their clients.

“That’s when performance really spiked, and we started reallocating budget toward Demand Gen and Shorts in a meaningful way,” he said. “Since then, we’ve seen steady momentum both from Google’s side and in results, which has only reinforced our investment.”

Tinuiti’s Binder said that the team’s Google reps have been making a strong case for Shorts as a way to reach audiences you won’t find on TikTok or Instagram.

“The numbers [that were shared with us] are surprising as 45 percent of Shorts viewers aren’t on TikTok, and 65 percent don’t use Instagram,” he said. “So if advertisers are only focusing on other platforms, they could be missing a huge slice of untapped potential.”

Markacy’s Kalfus echoed this perspective.

“They’ve [Google] been pushing heavily toward Demand Gen campaigns, effectively phasing out traditional YouTube conversion campaigns and shifting advertisers toward Shorts-first creative,” he said. “Shorts is now essentially another fast-paced, UGC-focused, demand-driving campaign type (like Reels + TikTok), but on a platform with unmatched engagement.”

YouTube did not respond to Digiday’s request for comment.