Google CEO Sundar Pichai revealed during Alphabet’s Q3 2025 earnings call that YouTube Shorts now earns more revenue per watch hour than traditional in-stream videos on the platform, highlighting a shift in the company’s strategy for short-form content.

“In the U.S., Shorts now earn more revenue per watch hour than traditional in-stream on YouTube,” Pichai said during the call, where the company announced its first-ever $100 billion quarterly revenue.

YouTube has aggressively expanded Shorts advertising offerings over the past year, and brand adoption has accelerated accordingly. Shorts continues to “perform well,” according to company executives, with Pichai specifically highlighting its revenue efficiency compared to traditional formats.

The platform’s broader success is evident in YouTube’s continued position as the number-one streaming platform by watch time in the U.S. for more than two years, according to Nielsen data cited by Google during the call.

The revenue efficiency of Shorts appears to be driven by higher reported purchase rates than those of both traditional YouTube formats and competing short-form platforms. According to Precise TV’s 2025 survey of 1,000 American teens and their parents, 51% of teen boys reported making purchases after watching YouTube Shorts ads, compared to 44% for TikTok ads. Among teenage girls, 43% reported making purchases after YouTube Shorts ads, compared with 41% after TikTok ads.

This conversion advantage appears to be tied to YouTube’s established position as a product discovery platform, with 18% of teens discovering products they requested from parents through YouTube, the highest rate among the platforms surveyed.

Expanding Platform Reach and Engagement

YouTube’s expanding reach into live sports content has also yielded notable results, according to the earnings call. The platform recently set a new milestone with its first-ever exclusive global NFL broadcast, drawing more than 19 million fans and setting a new record for concurrent viewers on YouTube. 

The executives believe this achievement underscores the platform’s growing significance in streaming beyond its traditional content offerings and demonstrates its capacity to attract massive audiences for premium live events.

Precise TV’s research provides additional context on user engagement, noting that 66% of teens regularly watch YouTube Shorts, with 18% reporting they watch for more than 1.5 hours daily. The survey also found that 89% of teens watch Shorts alone, while 23% co-view with parents.

AI Integration Drives Creator Tools and Monetization

Philipp Schindler, Google’s SVP and Chief Business Officer, emphasized the role of artificial intelligence in expanding YouTube’s monetization during the call.

“AI is now streamlining the entire content creation workflow, from generative video tools and more efficient editing, to AI-powered insights that help creators optimize their channels,” Schindler said. “We’re also using AI to expand monetization, automatically identifying products to make their videos more shoppable.”

The call highlighted several YouTube initiatives launched at its recent “Made on YouTube” event, including AI-powered features designed to help creators “supercharge creation and build their businesses.”

Direct Response Driving Growth

YouTube advertising revenues increased 15% year-over-year to $10.3 billion in Q3, with direct response advertising leading that growth, followed by brand advertising. The company specifically noted that the retail vertical continues to lead YouTube’s growth, with its Demand Gen advertising product helping to further monetize shopping-related content categories.

“Looking at the living room, our long-term bet, more advertisers are adopting interactive, direct response ads, leading to an annual revenue run rate exceeding $1 billion globally for this format,” Schindler noted.

Implications for Creators and Marketers

Precise TV’s research suggests that short-form content on YouTube may offer stronger monetization potential through affiliate marketing, product placements, and sponsored content. 

This is particularly relevant in categories where teens influence family purchasing decisions, which, according to Precise TV, include: Clothing/shoes (61%), Food/beverages (53%), Entertainment choices (51%), Restaurant selection (45%), Family games (40%), and Electronics (38%).

The research indicates this “household influence multiplier” extends YouTube’s commercial impact beyond teen-specific products into broader family spending categories.

Subscription Growth Complements Ad Revenue

Beyond advertising, YouTube’s subscription business shows strong momentum. The company reported crossing 300 million total paid subscriptions across its services, with YouTube Premium and YouTube Music as key drivers of this growth.

“Both YouTube Ads and Subscriptions saw strong growth this quarter,” Schindler said, describing the platform’s “twin engine monetization strategy.”

The company noted that on average, YouTube Music & Premium subscribers generate higher gross profit than ad-supported users, creating an increasingly diversified revenue model for the video platform.

Alphabet’s overall Q3 2025 financial performance showed consolidated revenue of $102.3 billion, a 16% year-over-year increase, with YouTube advertising as a key growth driver.

Checkout Our Latest Podcast