Bad omen for the online advertising market

The YouTube logo is seen at YouTube Space LA in Playa Del Rey, Los Angeles, California, U.S., October 21, 2015.

Lucy Nicholson | Reuters

Online advertising market continues to suffer, heavyweights letter and Microsoft It reported disappointing sales in recent quarters on Wednesday.

Alphabet’s YouTube ad revenue fell 2% year over year to $7.07 billion in the third quarter, missing analysts’ expectations of $7.42 billion. It was the first year-over-year decline in YouTube’s ad revenue since the company began reporting the division’s results in earnings reports in 2019.

Alphabet’s overall revenue growth fell sharply from 41% a year ago to 6% in the most recent quarter, underscoring how fears of a looming recession have led the company to cut back on advertising and marketing efforts. In fact, Alphabet CFO Ruth Porat said on a conference call with analysts that YouTube’s revenue decline “primarily reflects a further pullback in advertiser spending.”

Alphabet Chief Commercial Officer Philipp Schindler said some of the advertisers slowing down Alphabet’s online ad spending are from the financial services, insurance, loans and mortgages, and crypto industries.

Last week, Snap set the tone for the online advertising market with $1.13 billion in sales that fell short of analysts’ expectations for the third quarter, sending its shares plunging more than 30% the next day. Snap blames the company for its poor sales The company said in a letter to investors that it “reduced their marketing budgets” in response to the economic downturn.

Microsoft also reported a slowdown in its online advertising business on Wednesday.

Its search and news advertising businesses, which include Bing and Microsoft News, reported a 16% increase in sales in the September quarter (the first quarter of its fiscal 2023), well below the 40% revenue growth reported in the same period a year ago . In fact, the business’s growth rate has contracted in every quarter of the past year, in line with the overall downward trajectory of the overall online advertising market.

Additionally, LinkedIn’s sales growth fell to 17% in Microsoft’s fiscal first quarter, down from 42% in the same period in 2021.

“Reductions in customer ad spend, which also moderated later in the quarter, impacted ads and search across LinkedIn’s marketing solutions,” Microsoft Chief Financial Officer Amy Hood told analysts on the earnings call.

at the same time, Yuan It is expected to report its second straight quarter of sales declines on Wednesday, underscoring the current turmoil in online advertising. Judging by the tech giants’ recent earnings reports, Meta is unlikely to report any signs of a rebound in the online advertising market.

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