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Overtaken by TikTok, YouTube’s revenue plummeted

During the pandemic, YouTube has been one of Alphabet’s key growth drivers as more and more people are forced to stay home and be glued to screens. The video-streaming platform continued to grow rapidly over the past year as the economy reopened and advertising spending soared.

Overtaken by TikTok, YouTube revenue plummeted - Photo 1.

YouTube has been Alphabet’s key growth driver during the global pandemic (Photo: CNBC).

But in the first quarter of 2022 it was all over. Alphabet initially forecast YouTube growth of 25%. However, the actual figure is only 14%. This has contributed to a decline in Alphabet’s revenue and stock value.

Notably, Alphabet’s revenue hit $68.01 billion, up 23% year over year but still below the original guidance. Meanwhile, YouTube’s ad revenue hit just $6.87 billion, down from the $7.51 billion predicted by analysts.

YouTube metrics are the latest sign that the digital media advertising market is taking a hit. Last week, Snapchat CEO Evan Spiegel said the first quarter was a challenging one for competitor YouTube. The company also forecasts that sales could be lower in the next quarter.

More and more competitors want to gain market share on both YouTube and Snapchat, above all TikTok. Meanwhile, many other media companies, large and small, are also launching video and streaming services in an attempt to reclaim this lucrative slice of the pie.

“Although the company’s cloud and search businesses performed well in the first quarter, business for the YouTube platform fell far short of analysts’ forecasts. due to increasing competition from other social platforms like TikTok and many premium entertainment services like Disney+,” said Paul Verna, analyst at Insider Intelligence.

Looking back at Q2 2021, YouTube’s revenue hit more than $7 billion, up 83% year over year, roughly in line with Netflix’s quarterly revenue. YouTube’s disappointing recent results have dragged Alphabet’s profits down.

Now, YouTube is betting its future growth on a short-form video product called Short. This move aims to directly compete with competitors such as TikTok, Snap or Instagram’s Reels.

Overtaken by TikTok, YouTube revenue plummeted - Photo 2.

TikTok is considered YouTube’s biggest competitor (Photo: Tom’s Guide).

In May 2021, the company announced that it would pay content creators on the platform $100 million. During the meeting that just took place, senior managers of YouTube announced that Short received more than 30 billion views daily. However, the service is still in the early stages of monetization.

According to CNBC, many different factors have impacted the digital advertising market. These include iPhone privacy changes, supply chain disruptions, labor shortages, inflation and rising interest rates.

Alphabet CFO Ruth Porat said that the conflict between Russia and Ukraine has also reduced Google’s presence in the region, which in turn has impacted YouTube’s revenue.

“The most direct impact is that we have had to shut down most of our commercial activities in Russia, as announced in early March. Spending has been falling since the conflict began. by advertisers, particularly on YouTube in Europe,” Porat said.

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