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.
