YouTube continues to see ad revenue decline, 2.6% drop YOY

Alphabet reported Tuesday its latest earnings, citing that YouTube saw ad revenue fall 2.6% year over year as advertisers pulled back from the platform due to economic uncertainty. YouTube only raked in $6.69 billion in advertising revenue for the first fiscal quarter of 2023 compared to the $6.87 billion during the same period last year.

Despite the disappointing number, YouTube managed to slightly beat analysts’ expectations of $6.6 billion.

This is the third quarter in a row that YouTube’s ad revenue decreased. The downward sliding figures are a cause of concern for content creators, who look to ad revenue to earn income.

The company attempted to offer reassurance during Tuesday’s earnings call, choosing to focus on its success with the short-form video feature Shorts.

“Last year the number of channels that uploaded to Shorts daily grew 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.

As the platform experiences intense competition from rivals like TikTok, the company continues to focus on the Shorts to boost its growth. In November 2022, YouTube rolled out Shorts to smart TVs. Google announced in February that Shorts has reached 50 billion daily views.

“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.

YouTube also reiterated plans to ramp up its efforts to make YouTube more shoppable. The company partnered with Shopify last year to enable YouTubers and merchants to feature products 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.

The company confirmed to TechCrunch in November that it plans to add shopping features to Shorts.

Overall, parent company Alphabet reported $69.8 billion in revenue for the first quarter of 2023, a 3% increase from the same year-ago period.

YouTube CEO Susan Wojcicki stepped down from her role in February, taking on an advisory role across Google and Alphabet. Neal Mohan, chief product officer, is the new CEO.

In January, Alphabet cut 6% of its workforce, which affected 12,000 employees.