YouTube ad decline burns Alphabet

YouTube ad-revenue is down 2%. This is the platform's first ever ad-revenue decline YOY. Wake up call for platforms & creators alike... What's the first and easiest thing to turn off when times get tough? Ad spend. If a company needs to cut costs, the easiest move is to simply hit "pause" on advertising. This is what plagued Snap Inc. in 2021. They relied heavily on ad-revenue, and got badly hurt when advertisers pulled back. So, here's the lesson for platforms (it's obvious): Build out tools, subscriptions, upsells for users and creators alike. If you follow the product developments of most platforms over the past two years, they're all making headway on this. The people who will really need to learn here? Creators. This will be MANY creators first recession. Let me tell you, the overwhelming majority of YouTube-first creators make the majority of their money from YouTube AdSense. "Adsense is ??" - daily quote of a creator I once managed. Unfortunately, too many get blinded by the ungodly AdSense money that they neglect other streams of revenue. Back in 2018, during the 'AdPocalypse', many massive YouTube creators suddenly struggled to pay their bills. Ad-revenue slowing down is the first sign of a recession. MANY creators are about to learn the importance of diversification. #LICreatorAccelerator

People are talking about YouTube’s ad rev decline, but it’s important to see it in context. Last year YT added almost $10 billion in revenue, more than its total in 2017. The percentage jump was the largest in a decade as online spending peaked across the board.? In fact, even if Q4 sees a similar decline YoY as Q3, the full year 2022 revenue will still be more than 50% above 2020, or a CAGR of 23% over the two years.? There’s no question that ad spending across the board has slowed, and companies are tightening the belts.? But Google's stock drop today isn't a signal that YouTube is struggling, rather we are just in a hangover period of contracted spend after a crazy few years. #economy #technology #media #LICreatorAccelerator #litrendingtopics

Here are 6 Reasons why YouTube ad revenue is down 2% in the latest quarter, some cyclical, some structural. None irreversible. ? ??First, the ad market has slowed considerably.?Evan Shapiro calls this the #ImpressionRecession - read his analysis for more. ? ?? Second, the 3rd quarter includes back to school, which depresses viewing among kids.?Last year, due to Covid, we were all home more, which probably led less of the back-to-school dip. ? ??Third, YouTube has made a big push for YouTube Premium - a subscription service that removes ads.?Does that mean 2% of viewers are now subscribers??Probably not, but even a tiny portion of AVOD to SVOD is significant. ??Fourth, the rise in short-form swipable viewing, let by TikTok, has eaten into time spent with YouTube's traditional long-form content. Marketers are shifting dollars from Instagram and YouTube to TikTok - and Shorts isn't ready yet to significantly arrest that. ??Fifth, attribution is a huge problem, and marketers are having, trouble with ROI.?Also, YouTube only lets marketers target directly a very small number of videos, which problematic as well.?The competitive case FOR YouTube is harder to make today.?This is not unique to YouTube, BTW. ??Sixth, Creators are more intelligently managing multiple platforms via their own efforts or through partnerships with companies like Jellysmack.?There's an increasing awareness that owning your relationship with your community, rather than platform as proxy, is a better long-term strategy.?Emerging #Web3 capabilities and direct-to-fan platforms like Discord and Patreon are changing the creator-community equation. ?? What should YouTube do??First, don't freak out.?The economy will recover, and ad dollars will come back.?YouTube is far and away the strongest platform from a content, monetization and ability to juice awareness, consideration and conversion.? ? But now's the time to rethink and improve its relationship with brands and creators.?How can YouTube stem the creator flight to owned platforms, deliver more of what marketers want, and lean into what makes the platform great??They think about this every day, but now's the time to double down on what made YouTube great to begin with. ? Next, build Shorts into a strong TikTok competitor - one that does things TikTok can't.?As an American company it's already safer and more trustworthy, lean into that.?And don't mess up Shorts revenue sharing - TikTok can't match that either. Done right it will have creators flocking to - or returning to - the platform.? ? Finally, lean harder into subscriptions, new areas of growth like live-streamed shopping and game streaming and truly serving global creators. ? YouTube's on top.?It's where the world watches.?I wouldn't worry too much about the quarterly results. There's wobble - but others are wobbling just as hard or harder. #litrendingtopics #licreatoraccelerator #YouTube

YouTube ad revenue declined for the first time since Google started reporting their earnings. It’s down 2% from this time last year This despite the fact that Youtube launched shorts and has even gotten into podcast advertising with audio ads Advertisers are pulling back. This week week we also saw rumors that Mr Beast is raising money at a $1.5 billion valuation. All in an effort to expand his businesses which include Feastables, Beast Burgers, his merch, and an international media empire. What does this mean for creators? Creators are seeing they can't rely (solely) on an ad based business model. This message is being reinforced. And, this year many will feel that impact pretty dramatically. As a result, I think we're going to see further acceleration in creator owned and operated businesses. Brands, paid communities, subscription services, etc. These act as a hedge at a time when advertising income is becoming unreliable and unpredictable. With their community they've got a strong competitive moat. While other advertisers pull back ad dollars, creators can still reach their audiences - few use advertising at all. This gives them a nice leg up to launch and invest while other brands (potentially) lose mindshare. I imagine it will be an exciting next couple of years seeing creators build disruptive brands. We're still early. There is still so much opportunity.

Signs of a recession as Google misses the mark with a scary third-quarter report yesterday.... As of writing, Alphabet stock ( Google's parent company) has plunged 7.57% after its earning report showed another quarter of slowing revenue growth! Youtube advertising fell for the first time, and there was an unexpectedly severe slowdown in its search ads business. This is not good news for the broader economy, as advertising moves in line with consumer demand. While not a leading indicator, advertisers will only advertise if people buy goods. Therefore, this slowdown could be a real sign that companies and consumers are in for a bleak winter.? Let's see if Meta can show some positive signs with their quarterly earning report today. I have a feeling, though, that this will not be the case.?#google #advertising #economy #business #meta #recession

My feed this morning is full of the "Shocking" news that Google is struggling with ad revenue... ? ... But if you've been paying attention, this really shouldn't come as a surprise. You see, what the problem boils down to is precious, precious attention... And the fact that ads just don't grab people's attention in 2022. ? Today's hyperskeptical internet user has learned to block out ads subconsciously. ? We have to, since we all see an average of 4,000 - 10,000 ads every single day (But I bet you can't tell me about 99.99% of them). ? All this to say, online ads just don't have the same weight they used to when there are better ways to drive brand awareness, like: ? 1. Creating content 2. Sponsoring those that create content 3. Giving away 'premium' content for free ? Are you noticing a theme? ? Now, this isn't to say that "Online ads are dead!!! ??"... ? But what it does show is that, on a macro-level, is that people are realizing that basic ads don't grab people's attention the way that content can. ? Attention is currency. ? So why spend incredible amounts of money on ad campaigns when content is more effective at grabbing precious, precious attention. ? Well, 1 reason is that content-based businesses are harder to grow... ? But, if you're willing to invest in it upfront, and willing to be patient, it will absolutely beat your advertising ROI. ? And, as a bonus, once you have the content created, you have it forever… No management required. ? What are your thoughts on Google's ad problem? Do you see a better return from ads or content marketing? #contentmarketing #contentwriting #copywriting #content #google

BREAKING: #IMPRESSIONRECESSION I've been writing about the Impression Recession since the beginning of 2022. https://lnkd.in/eQ_GqSRs While it's actually been here for a while, we can now officially announce, it's arrived. Thanks YouTube. https://lnkd.in/gBR39SBb #advertising #digitaladvertising

Key Take Aways from Alphabet Third Quarter 2022 Results: - Alphabet is experience massive decline in revenue growth. (Only 6% YoY growth vs 41% YoY growth in 2021) - Internal costs are sharply increasing (Only a 25% Operating Margin vs 32% last year). A 7-point swing is massive. To put this into perceptive, outside of tech, most companies only have ~10-point Operating Margin. So this swing of 7 points in margin, for most companies, could be the difference between being profitable vs not. - Even though they are generating more total revenue than last year (same quarter) - they are considerable less profitable overall ($14B this year in Net Income vs $19B last year same quarter). This is related to the previous bullet. This is a clear indicator of upcoming price increase in Ads and google services. #tech #marketing #google #inflation

It's earnings season *and* Halloween, and I hope most marketers don't get too spooked by the results! ?? Microsoft had a far better quarter than Google. ?? Google saw its fifth straight quarter of decelerating growth. ?? YouTube's ad business actually shrank year over year. ?? Microsoft's results were actually healthy given current market conditions. Its search and news advertising revenue minus traffic acquisition costs jumped 16% (21% in constant currency). Some of that is due to its relative size, with Google's ad business being far larger—but still a good comparison. ?? Microsoft Cloud revenue reached $25.7 billion, which was up 24%—important given how important Cloud is to the company's short-term future. Microsoft has a strong Cloud business which should help protect it from the softness in advertising demand we believe will last into next year.? ?? Google Cloud actually grew at a faster clip—but it's far more reliant on advertising, so it's heading into a scary season of more expensive goods and consumers more worried about the economy. Not the best combination. ?? Last observation: Facebook & Instagram parent Meta report this week, and they don't have a thriving cloud business to offset its advertising challenges. Just sayin'. Stay tuned... #advertising #business #growth #economy #facebook #instagram #microsoft

NEW: Google Plunges 6% After Missing Q3 Revenue and EPS Estimates - Driven By Slowing Advertising Revenue?? This looks like a pretty bad miss. Search & ad revenue which is their core business came in at $39.5bn vs $45bn expected, YouTube was also disappointing falling -2% YoY (its first ever decline). Ominous signs for Meta and others - clearly there are some intense macro headwinds impacting ad spending globally. Alphabet shares were down 28% YTD before the miss. Disappointing.