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WARC Media’s Earnings Debrief, is a new quarterly series that reviews the financial releases of Big Tech and compares their ad revenue performance against WARC Media’s quarterly global ad spend forecast data, to provide a current round-up of their ad spend.
James McDonald, Director of Data, Intelligence & Forecasts, WARC, said: “WARC Media’s Earnings Debrief cuts through the headline numbers to show what’s really driving performance across the major ad platforms.
“By refreshing forecasts quarterly, WARC’s benchmarks give clients a timely read on where growth is accelerating, where it’s stalling, and why — from Amazon’s retail media momentum and full-funnel scaling, to YouTube’s Shorts monetisation gap and Google’s AI pivot. In a fast-moving market, this recency and context is essential for understanding trajectory and informing confident investment decisions.”
YouTube misses forecast by 9.3pp
YouTube delivered the most significant underperformance versus WARC’s Q4 2025 benchmark, missing forecasts by 9.3 percentage points (pp). While the result appears disappointing on the surface, there were several compounding factors at play.
Political advertising spend during the US Presidential Election had driven CPMs higher than average, though the degree to which the cooling off occurred in Q4 2025 was notably more marked.
Engagement with YouTube remains strong overall, but conventional in-stream advertising may not provide the future growth engine.
Shorts – a format developed to counter consumption on TikTok and Instagram – now average more than 200 billion daily views, and in several major markets, including the US, revenue per watch hour has overtaken that of traditional in-stream formats. However, despite rising consumption, Shorts contribute a relatively small share of overall ad revenue due to evolving monetisation frameworks.
Further, new data show that approximately a third of YouTube’s total revenue – some $20bn – now comes from subscriptions to its ad-free YouTube Premium service, which may act as a headwind for future ad revenue growth.
Mixed fortunes for Google as AI disrupts discovery
Google’s advertising performance was more mixed. The Google Display Network declined by 1.6% in Q425 and 1.9% during 2025 as a whole, in both cases roughly one point behind forecast. This reflected softer pricing and a shift in advertiser budgets towards higher-value formats, including YouTube and Google-owned inventory accessed via Performance Max and Demand Gen campaigns.
As spend migrates away from the open web, display’s relative contribution to Alphabet’s bottom line continues to stagnate. The company noted that income from AdSense fell, while AdMob (i.e. in-app ads) receipts grew but not enough to stymie overall decline.
Meanwhile, Google Search remains structurally resilient, coming in ahead of forecast during the quarter but roughly par (+0.8pp) for the full year. Despite intensifying competition from generative AI alternatives, Google’s integration of AI into search experiences appears to be sustaining engagement and query volumes, reinforcing its monetisation advantage. That said, the price is a near doubling of capital expenditure.
Meta falls just short of forecast
Though still just behind forecast (-1.4pp), Meta delivered a more robust fourth quarter, supported by an accelerating use of AI across its ad targeting and measurement suite, which has driven both higher ad impression volumes (+18%) and increased pricing (+6%). The scale of Meta’s AI infrastructure investment could place pressure on margins if returns take longer to materialise.
Strong growth in video engagement – particularly across Reels on Instagram and Facebook – has reinforced advertiser appetite for video placements, which typically command higher CPMs.
Meta reported that Reels watch time in the US – its largest market – rose by more than 30% in Q4. The format is a core part of Meta’s strategy to retain share of wallet against competitors, however, the monetisation rate for Reels remains lower than that for traditional in-feed ads.
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