Google Witnesses Back To Back Decline In Its Digital Ad Revenue As AI Threatens Its Dominance In Search

It’s not been a good year for Google as its latest earnings report showcased a back-to-back drop in digital advertising revenue. The news comes as the advancing world of AI technology, in particular ChatGPT, threatens its dominance in the world of search.

For those who may not be aware, advertising revenue is the main moneymaker for the firm for the past two decades. So that was really under the focus on Tuesday as the release for results for January to March were put on display for its parent firm named Alphabet.

Alphabet’s total revenue during this period increased from that seen in the past year while Google’s Q1 advertising sales comprising $54 billion saw a slight decline from one year back.

This dip saw a slight 4% decline during the initial three months of 2022 and that made this the first time that the tech giant witnessed back to back decline in its YoY advertising revenue since turning into a publicly traded firm in 2004.

On the other hand, the company’s leading video website, YouTube is known to be a marketing magnet but it also witnessed a drop in advertising sales by 2.56% since 2022. And this is the second time we’re seeing that occur.

Thanks to the increase in growth of the company’s cloud computing sector, the revenue for Alphabet during this quarter stood at $69 billion which is a rise from 3% since 2022. However, the advertising woes did end up taking a toll on the earnings of Google’s parent firm.

It earned a staggering $15 billion with shares standing at $1.17 and that’s an 8% fall from the previous year.

Let’s not forget how the downturn in earnings had to do with massive layoffs where there were more than $2 billion including other major cost-cutting endeavors.

Both the firm’s revenue and profit went over and above the expectations of analysts from FactSet Research. This and the company’s plans for its stock buyback assisted Alphabet’s shares rise by 4% during this extended trading period and that was right after the figures were released.

The firm’s shares dropped by 15% as fears for Google’s advertising decline were on the rise as were the company’s future. Meanwhile, the main core business for Google is one of the biggest challenges right now that it encountered in a long time.

Alphabet made it very clear during the start of January how it wished to boost profits by firing 12,000 workers which is a staggering 6% of the total workforce. And when you come to think of it, it’s the biggest purge in payroll that has ever taken place in a long time.

But the firings were not completed before the quarter’s end and that left the company with just over 190,000 workers by March end. So that’s nearly the same figure we saw at the end of December of last year when it opted to take on 34,000 more employees.

H/T: Mobiledevmemo / Eric Benjamin Seufert

Read next: Microsoft Surpasses Expectations And Beats Estimates In Its Q3 Earnings Report For 2023
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