YouTube logo seen at YouTube Space LA in Playa Del Rey, Los Angeles, California, United States of America October 21, 2015.

Lucy Nicholson Reuters

The online advertising market continues to suffer, as heavyweights Alphabet and Microsoft reported disappointing sales during their most recent quarters.

YouTube advertising revenue fell 2% year over year to $7.07 billion during parent Google’s third quarter, missing analyst estimates of $7.42 billion. It was the first time YouTube’s ad revenue declined year-on-year since the company began breaking out the division’s results in 2019.

Alphabet’s overall revenue growth fell sharply from 41% a year ago to 6%, underscoring how fears of a recession have forced companies to cut back on advertising and marketing campaigns. In fact, Chief Financial Officer Ruth Porat said during a call with analysts that the decline in YouTube revenue “primarily reflects additional pullbacks in advertiser spending.”

Some of the advertisers who slowed their online ad spending with Alphabet come from the financial services, insurance, lending and mortgage and crypto industries, said Philipp Schindler, Alphabet’s chief business officer.

Last week, Snap set the tone for the online advertising market when it missed third-quarter analyst estimates with $1.13 billion in sales, sending its shares tumbling by more than 30% the next day. Snap blamed its poor sales on companies reducing their marketing budgets” in response to the weak economy, the company said in a letter to investors.

Microsoft also reported a slowdown in its online advertising business.

Its search advertising and news business (which includes Bing and Microsoft News) reported sales growth of 16% in the September quarter, the first of its fiscal year, well below the 40% revenue growth it reported a year earlier. In fact, the growth rate of that business has been declining every quarter of the past year, coinciding with the general downward trajectory of the entire online advertising market.

In addition, Microsoft’s LinkedIn quarterly sales growth fell to 17%, down from 42% in the same period in 2021.

Microsoft CFO Amy Hood told analysts during an earnings call that “reductions in customer advertising spending, which also weakened later in the quarter, impacted LinkedIn’s search advertising and marketing solutions.”

Meanwhile, Meta On Wednesday it is expected to report a second straight quarter of declining sales, reflecting the current tumult in online advertising. Judging from recent earnings reports from various tech giants, parent Facebook is unlikely to report any signs that the online advertising market is set for a rebound.

Alphabet loses both revenue and EPS, a slight upside to Google's cloud



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