New data on Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube revenue might be alarming to many, especially for investors with high expectations for video advertising. However, for Facebook (NASDAQ:FB), it could be a different story.

A large and growing platform, reportedly
YouTube is the most successful video advertising platform on the Web, and has led many other companies with large networks to follow in Google's footsteps. While Google reports certain metrics relating to YouTube's viewership, like having more than 1 billion viewers per month, it doesn't give actual revenue figures.

Typically, these fundamental estimations are delivered from research firms like eMarketer, who predicted $5.6 billion in gross revenue last year. If accurate, YouTube's advertising dollars increased 51% over 2012 and now account for 11% of the company's total ad revenue.

After content-sharing payments, YouTube would have grossed Google nearly $2 billion in revenue last year.

Here comes controversy
However, according to a new report from The Information, YouTube is not performing as well as originally thought. Reportedly, daily viewing hours are short of 300 million, significantly lagging Google's goal of 1 billion hours for 2016. The Information also claims it has learned that YouTube's gross revenue last year did not surpass $5.6 billion, but rather $3.5 billion, well short of expectations.

If accurate, this would mean that YouTube's revenue growth was actually less than 25%, rather than 51%. It also means that YouTube's near-$2 billion in gross revenue would be closer to $1.5 billion. Finally, it also means that video advertising with this business model may not be as lucrative as investors expect.

Should Facebook investors be worried?
With all things considered, The Information article is only one report, but a curve ball for a business that investors simply assumed was firing on all cylinders. The report pokes major holes in video advertising, which could have implications for Google's future, potentially spooking other players in the game, like Facebook.

Albeit, this is where business model comparisons come into play, as this news should have no material impact on Facebook. The company's video advertising services do not revolve around publicly posted videos and content-sharing costs. Instead, Facebook charges a flat fee, believed to be around $2 million per day, for each advertiser, running several different ads during a 24-hour period.

Facebook has been conservative in its launch of video advertisements, but with nearly $9 billion in 12-month revenue and 1.3 billion users, figuring its fundamental potential is a matter of mathematics. Three adds at $2 million per day for 365 days equals more than $2 billion annually. The company can then boost the price or quantity of advertisements, depending on demand.

Foolish thoughts
While holes are being poked in Google's YouTube business model, Facebook could still stand to earn billions, depending on demand. Given the fact that advertisers are willing to pay in excess of $4 million for a one-time 30-second TV SuperBowl ad, and Facebook has a platform that's 10 times larger with an all-day advantage, there are reasons to believe that demand will be quite high for the company's platform. If so, don't be surprised if video advertising becomes Facebook's next growth driver for both its stock and fundamentals, and perhaps its greatest revenue-generator.


Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.