YouTube Ad Revenue Fell by 2.6% – Alphabet 2023 Earning Call

By Palak Sharma
Published on April 26, 2023

On Tuesday, Alphabet Inc., the holding company to Google (parent to YouTube), reported its latest revenue. Due to advertisers leaving the site because of the uncertain economy, YouTube’s ad income fell 2.6% year over year.

Compared to the $6.87 billion earned during the same period last year, YouTube only generated $6.69 billion in advertising income for the first fiscal quarter of 2023.

Although the results were disappointing, YouTube still slightly surpassed experts’ predictions of $6.6 billion.

For the third consecutive quarter, YouTube has seen a decline in ad revenue. The declining numbers are concerning for content creators who depend on ad revenue for income.

During the Tuesday outcomes call, the company tried reassuring investors by emphasizing its success with the short-form video feature “Shorts.”

Alphabet Q1 2023 Earning Call

The platform has fierce competition with rivals like TikTok. Therefore, the business is still concentrating on the Shorts to accelerate its growth.

YouTube began distributing Shorts to smart TVs in November 2022. In February, Google declared that Shorts had attracted 50 billion daily views.

“Last year the number of channels uploaded to Shorts Daily grew by over 80%. Those posting weekly on Shorts saw the majority of new channel subscribers coming from their Shorts posts,” Sundar Pichai, CEO of Google and Alphabet, said.

“We’re seeing strong watch time, growth… monetization is also progressing nicely. People are engaging and converting on ads across Shorts at increasing rates,” added Philipp Schindler, Google’s chief business officer.

In February, Susan Wojcicki, the CEO of YouTube for nine years, announced her resignation. Former product head Neal Mohan took the CEO position in the first quarter.

In his first statement to the public, which was released on March 1, Mohan stated that his key goals were to promote YouTube’s creators by enhancing the platform’s monetization options, improve accessibility, and concentrate on development in industries like podcasting and gaming.

These categories included YouTube’s short-form content, Shorts, as well as its streaming offerings, YouTube TV, and Primetime Channels.

Google/Alphabet announced its largest-ever round of layoffs in January, eliminating 6,000 workers (or 12% of its overall staff).

According to the business, $2 billion was spent on compensation and other separation charges in the first quarter.

Also, YouTube confirmed its intention to increase its efforts to improve the shopping experience. The firm teamed up with Shopify last year to allow YouTubers and merchants to advertise items on their channels.

“Shopping on YouTube… It’s still super early days. One highlight last year, we brought shopping to more creators and brands by partnering with commerce platforms like Shopify. Now more than 100,000 creators, artists, and brands have connected their own stores to their YouTube channels to sell their products. We’re excited about the potential ahead,” Schindler said.

Even recently, YouTube was testing scheduling in product detailing and helping creators schedule their product details to show at a certain time. Previously, you had to upload all of your product information before the live stream.

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