Alphabet on Tuesday reported its latest earnings, noting that YouTube saw ad revenue drop 2.6% year over year as advertisers pulled out of the platform due to economic uncertainty. YouTube generated just $6.69 billion in ad revenue for the first fiscal quarter of 2023 compared to $6.87 billion during the same period last year.
Despite the disappointing figure, YouTube managed to slightly beat analysts’ expectations of $6.6 billion.
This is the third quarter in a row that YouTube ad revenue has declined. The dangling numbers are a concern for content creators, who look to advertising revenue to earn income.
The company tried to offer reassurance during its earnings call Tuesday, choosing to focus on its success with a short video feature.
“In the past year, the number of channels that have shorts uploaded daily has increased by more than 80%. Those who post weekly on shorts have seen the majority of their new channel subscribers come from their short posts,” said Sundar Pichai, CEO of Google and Alphabet. .
As the platform faces stiff competition from rivals like TikTok, the company continues to focus on shorts to fuel its growth. In November 2022, YouTube rolls out Short Films to Smart TVs. Last February, Google announced that short shows reached 50 billion views per day.
“We’re seeing strong watch time and growth… Monetization is also progressing well. People are engaging and converting ads via short films at increasing rates,” added Philip Schindler, Google’s chief business officer.
YouTube also reiterated its 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…we’re still very early days. One of the highlights of the past year is that we brought shopping to more creators and brands by partnering with commerce platforms like Shopify. Now over 100,000 creators, artists, and brands have connected their stores their own YouTube channels to sell their products.“We’re excited about the future possibilities,” 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 in the first quarter of 2023, up 3% from the same period last year.
YouTube CEO Susan Wojcicki stepped down from her position in February, taking on an advisory role across Google and Alphabet. Neil Mohan, Chief Product Officer, is the new CEO.
In January, Alphabet cut 6% of its workforce, affecting 12,000 employees.