Google’s Q3 earnings were released today and for search, YouTube, and ads, it was a big “meh” across the board. Let’s take a look.
YouTube. YouTube earnings were down about 2% to $7.07 billion from $7.21 billion. To put that into perspective, analysts were expecting an increase of at least 3%. This is the first-ever decrease since Google began reporting
Missing the ad mark. Search ad sales grew 4% to $39.5 billion. Analysts had expected revenue of $41 billion. Google CFO Ruth Porat said that the modest growth was because of difficult comparisons to an unusually strong quarter a year earlier, a trend she said would continue in the fourth quarter.
Google also saw advertising pullbacks in the mortgage, loan, and crypto categories, says Philipp Schindler, CBO, Google.
New products and developments in Q3. In Google’s Search On event, a number of new products and features were unveiled including:
View the entire list of new shopping features announced at this year’s Search On event here.
What Google said. Sundar Pichai, CEO of Alphabet and Google, said: “We’re sharpening our focus on a clear set of product and business priorities. Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long term and being responsive to the economic environment.”
Are advertisers to blame? Advertisers and companies may be pulling back budgets amid rising inflation and interest rates. In both Google’s FY22 Q3 and Microsoft’s FY23 Q1 earnings calls, leadership blamed the declines on advertisers pulling back. Microsoft CFO Amy Hood told analysts that “reductions in customer advertising spend, which also weakened later in the quarter, impacted search in advertising and LinkedIn marketing solutions.”
Total revenues. Q3 revenues were $69.1 billion, up 6% YoY.
Dig deeper. You can view the earnings report from Alphabet here.
Why we care. Q3 showed slow growth, which could be a warning to advertisers that further budget cuts and higher CPCs could be on the horizon. Google emphasized YouTube Shorts and CTV placements, so they could be hinting at what’s to come.
The holidays historically drive additional revenue for ad platforms, but with the uncertain economy, this year is anyone’s guess.
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