In its Q4 and 2022 fiscal year results, Google parent Alphabet revealed that its advertising revenue has dropped by almost US$2.2 billion (around AU$3 billion) compared to 2021.
Google Search ads revenue dropped by almost US$900 million (around AU$1.27 billion) year-on-year. YouTube’s ad business declined by US$670 million in revenue (around AU$946 million). The broader Google Network saw its ad revenue decline by US$830 million (around AU$1.17 billion)
As a result, Alphabet’s share price fell by as much as 6 per cent in after-hours trading as it missed analyst expectations despite climbing significantly before the results were released. The company’s overall revenue for Q4 climbed by 1 per cent compared to 2021. For the whole year, however, the company saw revenue climb by 10 per cent.
“Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point, and I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond,” said CEO Sundar Pichai.
“There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel devices. We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet.”
These results do not account for the 12,000 or so staff that Google laid off last month. The company said it expects to pay between US$1.9 billion and US$2.3 billion (AU$2.68 and AU$3.25 billion, respectively) in employee severance packages. It also said that it would spend around AU$706 million optimising its global office space.
Google’s advertising business is facing a series of headwinds. TikTok, for example, has kneecapped revenue made by YouTube Shorts with its aggressive pricing. Apple’s AppTrackingTransparency has made advertising on mobile less lucrative with new privacy concerns. Plus, and of the biggest concern for the company, is the looming adtech antitrust case being filed by the US Department of Justice.
2023 looks set to be a difficult year for Google.
