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Why has YouTube Ad Revenue Declined for the First Time?

YouTube ad revenue dipped 2% year-over-year to $7.07 billion. This is the first time they’ve reported a decline since it’s parent company, Alphabet started reporting its earnings separately in 2020.

Why is YouTube Ad Revenue Down?

I have a couple theories:

1.) Inflation

If you’re an advertiser and you’re getting hit by inflation and want to pull back, where do you pull back from? Historically, most marketers will tell you awareness tactics are the first to go. I’d say it’s safe to say Meta will share losses in the coming hours or day.

2.) Cutting Budgets on Specific Channels

Channels that have a harder time getting credit for conversion (because of attribution), like video and social, have a harder time proving they’re delivering results. When it’s time to spend less, which is potentially happening with an upcoming recession, those channels get slashed first.

Other Thoughts

I am curious about something else though. Presumably, that number would be worse if it wasn’t for the fact that Performance Max campaigns didn’t force you to spend on YouTube (if that number is indeed factored in). I wonder if any of our readers know the answer? So, what is your hot take – do you have any additional theories as to why YouTube is reporting ad loss?

About the author: Amanda Grow is the Marketing Lead at Chacka Marketing. With over 10+ years of experience in the digital field, she enjoys sharing her commentary on marketing trends and product news with her peers and clients.

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