Alphabet posts 6% revenue growth, YouTube ad revenue drops 2% in Q3
The digital ad sector has been struck by ad budget curbs put into place by companies amid rising inflation and interest rates
On Tuesday, Google’s parent Alphabet reported that their quarterly earnings fell short of market expectations as the digital ad market, which drives their revenue, is grappling with challenges.
Alphabet said that its advertising revenue was $54.48 billion in the third quarter compared with $53.13 billion last year. This means the world’s largest media company’s overall “revenue growth” drastically has declined from 41% a year ago to 6%.
Ad revenue of YouTube, a Google-owned site, dropped 2% year over year to $7.07 billion during the third quarter. It was the first time YouTube’s ad revenue shrank on a year-over-year basis since Alphabet started breaking out the division’s results in 2019.
The company’s Chief Financial Officer Ruth Porat said during a call with analysts that YouTube’s revenue decline “primarily reflects further pullbacks in advertiser spends.”
Some of the advertisers that slowed their online advertising spending with Alphabet come from the financial services, insurance, loans and mortgage and crypto industries, said Alphabet chief business officer Philipp Schindler.
The market for online advertising has been distorted globally. Recently, Google’s rival Snap has also reported a decline in growth.
Companies pull back their budgets amid rising inflation and interest rates. This has led to the digital advertising market being struck by a slowdown in spending in the past few quarters.
