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In Q3, YouTube’s Ad Revenue Declined 1.9%, Alphabet Missed Wall Street’s Expectations

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In Q3, YouTube's Ad Revenue Declined 1.9%, Alphabet Missed Wall Street's Expectations

(CTN News) – YouTube’s revenue for the third quarter of 2022 declined by 1.9% due to a decline in ad spending. Google’s video platform notched $7.07 billion in ad sales — well below Wall Street forecasts and its first year-over-year decline in more than two years.

Overall, Alphabet, Google’s parent company, missed analyst expectations as well. In Q3, the company reported revenue of $69.1 billion and earnings per share of $1.06.

According to Refinitiv, Wall Street expected revenue of $70.61 billion and earnings per share of $1.25.

YouTube ad sales jumped 43% in the last quarter. The StreetAccount estimates compiled by FactSet expect YouTube’s ad revenue for the quarter to reach $7.42 billion.

For the calendar year 2019, Google disclosed YouTube ad revenue for the first time.

In announcing its earnings, Sundar Pichai, CEO of Alphabet and Google, noted the company has introduced “new ways to monetize YouTube Shorts.”

This involves both investing responsibly and responding to economic conditions.

In the past two years, YouTube’s has heavily marketed Shorts, its short-form video feature designed to compete with TikTok. In June, Google announced that 1.5 billion people logged into YouTube Shorts each month.

In early 2023, YouTube Shorts will launch a revenue-sharing program for creators who meet certain criteria. YouTube Shorts launched ads this year.

YouTube will pay Shorts creators 45% of revenue based on views, which is lower than the core YouTube Partner Program’s 55%.

As revenue growth has slowed, Google has made several cost-cutting moves. Stadia, the company’s cloud gaming service, was shut down last month.

According to Pichai, Google will slow its hiring pace through the end of 2022. He suggested layoffs as a way to increase the company’s “efficiency” by 20% at the Code Conference last month.

In July, Google reported YouTube’s  TV had more than 5 million subscribers and users on free trials, making it the largest internet pay-TV service in the United States.

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