YouTube’s Ad Revenue Falls 2% in Q3 – Its First Decline Since 2019

Alphabet/Google executives blame lower gaming and increased money-pinching by advertisers after a disappointing third-quarter results

Youtube advertising
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Alphabet reported a 2% dip in advertising revenue for YouTube during its third-quarter earnings report Tuesday. That marks a year-over-year decline to $7.07 billion from $7.21 billion. It’s the first decline in ad revenue for the No. 1 video platform since Alphabet began reporting the numbers in 2019.

On a conference call with analysts Tuesday, Philipp Schindler, Google chief business officer, cited lower gaming engagement compared to a pandemic increase and a lower advertising sales as brands reduced spending due to the weakening global economy.

Nevertheless, Alphabet and Google CEO Sundar Pichai expressed optimism in the platform’s future on the call, citing new revenue streams, including its TikTok copy, YouTube Shorts, and a revenue sharing program with creators launching next year.

“We remain focused on long-term growth for our community of viewers, creators and advertisers,” Pichai said. “First, improving the monetization of Shorts. This is a big deal for creators and for our business. We’ll introduce revenue sharing on Shorts early next year. This update makes YouTube the only platform where creators can monetize their content across short, long and live formats at scale.”

Overall, Alphabet missed Wall Street expectations for the company as a whole. Earnings per share (EPS) was $1.06 versus the expected $1.25. And revenue dipped to $69.09 billion versus the expected $70.58 billion.

In after-market trading, Google’s stock price fell after the news of its disappointing Q3 results about 7%, but has since recovered to rise about 1.9% at time of writing.