Google announces a drop in ad revenues – is this the beginning of the end?
Published: April 27, 2023
The unthinkable is happening.
There is an unprecedented downturn in Google’s Ad revenues, its main money spinner in over 20 years!
Google’s parent company, Alphabet Inc. released its earnings for the first quarter this year and it had some startling (or was it expected?) information for the world to see.
Even though the total revenue Alphabet earned during this first quarter was higher than the earnings of the same corresponding period of the previous year, Google’s first-quarter ad sales of $54.5 billion showed a slight drop from a year ago.
This comes right at the heels of the nearly 4% decline during the last three months of last year, which makes it the first time ever Google has had to deal with back-to-back drops in year-over-year ad revenue since it became a publicly traded company way back in 2004.
Google’s marketing ‘magnet’, the wildly successful YouTube, also saw a 2.5% drop in its ad sales, compared to the previous year. This is its second consecutive quarter that saw a drop in revenues.
On the whole, Alphabet’s total revenue for the quarter was $69.8 billion, which is a 3% increase from last year. This is mainly due to the growth in its Cloud Computing Division.
The drop in the earnings has had an effect on its shares as well. Alphabet’s earnings of $15.05 billion, or $1.17 per share, are actually an 8% decrease from last year.
In all, Alphabet’s shares have dropped by about 15% in the last year thanks to concerns of investors about the drop in the revenues of Google’s ads.
Is this the end of Google?
Google has been the undisputed king for years! But it looks like its days are numbered.
Is AI and particularly ChatGPT powering the lowly (David) Bing to rise up against a Goliath like Google?
Well, it’s about time!
Competition is good. For the longest time, Google is where people go when they search. Search itself (the moniker) has been replaced by Google. And that was it! Did anyone even consider Bing when looking for information?
Google has had this undeniable and even scary monopoly and control on an unbelievable amount of the world’s access to information on the internet for many years now. Google search takes anything anyone does on its page and packages and uses it for advertising – so much so that one can’t really tell the difference between what is truly authentic and trustworthy and what isn’t.
AI is changing the way the world does things. ChaptGPT is revolutionizing the way Bing operates. Forget that it is a novelty. It works.
Speaking of competition, YouTube is taking a beating from TikTok.
The poor economic climate is taking its toll on everyone – Google and Bing and even Meta included.
Circling back to Google, a drop in ad revenues means that there are fewer advertisers which will adversely affect the ability of the platform to reach its target audience. All this translates into a lower level of success when it comes to the actual campaigns. Low ad revenues could also lead to a not-so-great platform for marketers to run their campaigns as there won’t be enough revenues to invest in innovative and creative improvements in the platform.
A drop in revenues can trigger a change in pricing and create a different kind of competition for ad placements. Policies could also change. And if Google also shifts its focus on to Generative AI, then it could lead to marketers losing control over their campaigns.
On the other hand, a drop in revenues means a drop in demand, which could mean lower ad costs for marketers.
It is not the best of times for the world. There is constant talk of economic uncertainty and the possibility of heading into a deep recession. Re-structuring and layoffs are common. We have to wait and see how this all pans out.
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