Google is trying to earn more money from YouTube by capitalizing on people using it for searches

Key Points
  • Google is expanding YouTube's search-based advertising capabilities as it tries to generate more revenue from the video site.
  • In addition to its dominance in video, YouTube is the second-largest search engine in the U.S., according to the company.
Susan Wojcicki, CEO, YouTube speaking at #VidCon, July 23, 2015.
Harriet Taylor | CNBC

Google is bringing YouTube more tightly into its search business by giving advertisers more ways to target users based on their queries and viewing habits on the site.

It's the latest effort by Google to turn the company's massive video engine into a bigger money maker and diversify from search. While parent company Alphabet doesn't report on YouTube's revenue, analysts at Nomura Instinet estimated in July that the site generated $12.8 billion in sales in 2017, and the firm expects that number to reach $22 billion by 2020. By way of comparison, Google's total ad revenue in 2017 was $95.4 billion.

The company said Monday during Advertising Week in New York that it's adding new sponsorship opportunities through "ad extensions for video." Now, people searching for reviews on a movie may see a banner for showtimes in their area, or someone looking at a game review might see a link to download the game. Travel-related videos could include information to help users book a trip.

The sponsored links on mobile phones show up underneath the videos.

An example of sponsored showtimes linked to a video. Source: YouTube

In addition to the new ad tools, YouTube also announced that third-party market research company IRI will be able to track ad campaign metrics, a particular benefit to consumer brands. Nieslen Catalina Solutions and Oracle Data Cloud are already YouTube partners.

"What we're announcing at Advertising Week is really a doubling down, really a solution to make a video more actionable and to allow advertisers to measure success," Tara Walpert Levy, Google's vice president of agency and brand solutions, said in an interview.

YouTube has long been a place for bolstering a brand's awareness among consumers, but it wants to expand to provide more performance metrics.

Search on YouTube

Google needs to grow beyond its core search business and give advertisers more services and opportunities as competitors like Amazon capture a bigger share of ad dollars. According to eMarketer, 83 percent of Google's U.S. and worldwide ad revenue for comes from search-based advertising.

"The advertising ecosystem has always been incredibly competitive," Levy said. "The appeal of Amazon really validates what we are doing and talking about today, the importance of measurement, the importance of driving action on a platform."

YouTube is so desirable for brands because it isn't just a video portal, but it's also the second largest search engine in the U.S., according to the company. About 60 percent of people who search for a product on Google then go to YouTube to do more research, Levy said.

Currently, Google search, Google Maps and other Google app data can be used to build "custom intent audiences" that can be targeted across the company's properties, including YouTube. However, YouTube data is not used to find potential customers on other Google platforms.

YouTube is starting to more closely integrate with other Google services, and last year it began allowing advertisers to buy ads on the video site based on a user's YouTube searches.

Next 20 years for Google go beyond search, says analyst
Next 20 years for Google go beyond search, says analyst