Alphabet has revealed in its latest earnings report that during the first quarter of 2023, YouTube's ad revenue dropped by 2.6% year over year (YoY) to $6.69 billion, compared to the $6.87 billion generated during the same period in 2022. The decline in ad revenue marks the third quarter in a row where YouTube saw a downward trend, a direct result of advertisers cutting back on spending due to economic uncertainties.
YouTube's revenue beat analysts' expectations of $6.6 billion despite the persistent fall. This decline is concerning for content creators relying on ad revenue as their primary source of income. However, during its Tuesday earnings call, the company shone a light on its accomplishments with the popular short-form video feature, Shorts.
Sundar Pichai, CEO of Google and Alphabet, said, "Last year, the number of channels uploading to Shorts daily grew over 80%. Those posting weekly on Shorts saw most new channel subscribers come from their Shorts posts." With intense competition from rivals like TikTok, YouTube is concentrating on Shorts to drive growth. In November 2022, YouTube expanded Shorts to smart TVs, and by February, the feature reached 50 billion daily views.
Philipp Schindler, Google's Chief Business Officer, added, "We're seeing strong watch time, growth… monetization is also progressing nicely. People are engaging and converting on ads across Shorts at increasing rates." Furthermore, YouTube announced efforts to enhance shopping options on the platform, after partnering with Shopify last year to enable YouTubers and merchants to display 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 stated.
YouTube confirmed in November to TechCrunch that it intends to introduce shopping features to Shorts. During the first quarter of 2023, parent company Alphabet saw an overall revenue growth of 3% from the same period in the previous year, totaling $69.8 billion.
Susan Wojcicki, former YouTube CEO, stepped down from her position in February, taking on an advisory role across Google and Alphabet, with Neal Mohan, Chief Product Officer, stepping in as the new CEO. Earlier this year, Alphabet announced a workforce reduction of 6%, affecting 12,000 employees.
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