YouTube ad revenue growth expected to slow, below Wall Street expectations

In the first quarter, YouTube generated $6.86 billion in ad revenue as the service experienced slower growth, lowering Wall Street expectations to $7.4 billion and representing a 14% increase in the quarter.

The video streaming platform saw significant growth during the pandemic last year, when it generated $28.8 billion in ad revenue and a 50% increase in revenue in the first quarter of 2021.

Speaking to analysts, Alphabet CFO Ruth Porat said YouTube saw a “reduction in ad spend” in Europe after the war in Ukraine, which had a “huge impact” on YouTube’s revenue. YouTube also had an “exception” for Q1 2021 for direct-response advertising, making it difficult to compare growth rates seen at the time, Porat said.

YouTube has focused more resources on YouTube Shorts, its short-form video platform that appears to be a competitor to TikTok. Alphabet CEO Sundar Pichai said the platform is now averaging over 30 billion daily visits. And as viewers for Shorts increase, the company is revising ads in Shorts and focusing on “closing the gap” with traditional YouTube ads, Porat said.

Alphabet, the parent company of Google, also reported a loss of revenue in the first quarter, with net income of about $16.4 billion and total revenue of $68 billion. Porat attributed some of the slowdown in growth to a “difficult” comparison with the previous year, when Google saw the immense impact of the pandemic on the company’s advertising business. The executive also warned that the results of the next quarter showed that Google had “suspended the absolute majority”. [the company’s] Business activity in Russia “due to the invasion of Ukraine in March. According to Porat, about 20% of Google’s revenue in 2021 came from Russia, mainly from advertising.