YouTube’s shrinking ad business is an ominous sign for the battered online ad market

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  • YouTube revenue declined for the first time since Google began reporting the division’s earnings separately.
  • Alphabet’s overall quarterly revenue growth declined from 41% to 6%.
  • The growth rate of Microsoft’s search and news advertising business has been shrinking each quarter of the past year, coinciding with the general downward trajectory of the online advertising market as a whole.

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The online advertising market is hurting as the heavyweights Alphabet And Microsoft reported disappointing sales during its most recent quarters.

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YouTube ad revenue fell 2% year over year to $7.07 billion during the Google parent’s third quarter, missing analysts’ estimates of $7.42 billion. It was the first time YouTube’s ad revenue had decreased on a year-over-year basis since the company began dismantling the division’s results in 2019.

Alphabet’s overall revenue growth fell to 6% from 41% a year ago, underscoring how fears of an impending recession have prompted companies to cut back on their advertising and marketing campaigns. Indeed, Chief Financial Officer Ruth Porat said during a call with analysts that the decline in YouTube’s revenue “primarily reflects a further reduction in advertiser spending.”

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Some of the advertisers slowing their online advertising spend with Alphabet come from the financial services, insurance, loan and mortgage and crypto industries, said Philip Schindler, Alphabet’s chief business officer.

Last week, Snap set the tone for the online advertising market when it missed third-quarter analyst estimates with $1.13 billion in sales, sending its shares down more than 30% the next day. Snap blames companies for its poor sales ,In response to the weakening economy, the company reduced its marketing budget, saying Letter to investors.

Microsoft also reported a slowdown in its online advertising business.

Its search and news advertising business (including Bing and Microsoft News) reported a 16% increase in sales in the September quarter, the first of its fiscal year, well below the 40% revenue growth it reported a year earlier. was. In fact, the growth rate for that business has been shrinking each quarter of the past year, coinciding with the general downward trajectory of the online advertising market as a whole.

Additionally, Microsoft’s LinkedIn’s quarterly sales growth declined to 17% in 2021 from 42% during the same period.

Microsoft CFO Amy Hood told analysts during an earnings call that “decreased customer ad spend, which weakened later in the quarter, impacted search in advertising and LinkedIn marketing solutions.”

During this, meta On Wednesday, online advertising is expected to report its second-straight quarter of declining sales, underscoring the current turmoil. Given the recent earnings reports from various tech giants, it’s unlikely the Facebook parent is going to report any signs that the online advertising market is poised for a rebound.

Credit: www.cnbc.com /

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