Ad Revenue Hits 5 Year Low, Here’s What That Means for the Industry

The digital landscape is largely defined by ad revenue, and it turns out that these revenues have been decreasing over the past few years. A report from PlayWire recently revealed that ad revenues reached their lowest rates in half a decade, and that means that marketers, creators and other people that rely on this revenue have less to work with than might have been the case otherwise.

With all of that having been said and now out of the way, it is important to note that we are in a time period where ad revenues are historically known to drop off. Revenues can decrease by a whopping 77% between the months of December and January, but in spite of the fact that this is the case 2022 represented the lowest total from December as well with all things having been considered and taken into account.

When compared to 2021, the month of December in 2022 brought in 30% less revenues. That is concerning because of the fact that this is the sort of thing that could potentially end up creating an imbalance within the industry that could take several years to fully play out in any capacity.

The rise of Covid a few years ago likely played a role in declining revenues across the board. However, things have not picked up despite the pandemic more or less receding from public view. Advertisers have a bearish outlook on the future of the industry, and this could lead to the recovery process taking far longer than it needs to in the near future.

It can be easy to assume that the current drop in revenue is largely being caused by the notorious December to January drop, but that would ignore the reality that December revenues have been stubbornly low as well.

Based on the data presented in this study, the ad revenues from March of 2023 represent an Ad Index of just 23. The index has never come close to dipping this low, even during the absolute heyday of the pandemic. This does not bode well for the future of the industry, and most major players are worried about what the consequences of this dip might end up looking like.

Countless website owners, experienced webmasters and Google AdSense web publishers around the world are beginning to complain about this. A number of them stated that they have failed to meet the threshold required to request a payment for the month for the first time in over a decade. These site owners frequently earned tens of thousands of dollars a month from AdSense revenue, and them not being able to meet the minimum payment amount is a definite sign that something is amiss.

The post pandemic recovery after the lows of 2019 and 2020 made some people think that a better future was on the horizon. Unfortunately, a multitude of factors including global economy upset, inflation and shift in advertising trends have led to ad revenues dipping once again, so we will need yet another miracle to turn the ship around. The data from Ezoic's Ad Revenue Index shows that ad earnings of global sites is slowing down further in 2023. While Optad360's statistics of "websites’ and mobile apps’ programmatic advertising revenue" illustrates an all time low index value.

However, experts are saying that there might still be some hope yet. While the first half of 2023 is likely going to be a nightmare for people who rely on AdSense revenues to any extent, it should be mentioned that the second half of the year is hopefully going to play out far better and that will bolster support for the long term performance of the industry.

It will be interesting to see where things go from here. Industries that rely on ad revenue are in a state of perpetual crisis, and with personal privacy and data protection laws further limiting their ability to grow, only time will tell us the right solutions. Either way, 2023 will be a litmus test that will determine the future of the industry.

Read next: Game App Marketers Invest $27B in Ads Despite Economic Slump
by Zia Muhammad via Digital Information World