youtube cracks down on ad blockers

YouTube is yet again cracking down on ad blockers and looks serious this time around amid the slowing global digital ad market. The company is running an experiment to limit access to only three videos when ad blockers are turned on.

YouTube is nudging users to either turn off the ad blocker or buy the premium ad-free subscription.

The Bleeping Computer first spotted the warning put out by YouTube which states “Video player will be blocked after 3 videos.”

That message is followed by “It looks like you may be using an ad blocker. Video playback will be blocked unless YouTube is allowlisted or the ad blocker is disabled.”

To be sure, YouTube has tried to crack down on ad blockers previously also albeit with limited success.

global ad spending by year
Source: Statista

However, there seems to be a sense of urgency now amid the slowdown in digital ad spending coupled with the competition from TikTok.

Media investment group GroupM predicts in its new report that global ad spending would rise 5.9% in 2023 while digital ad spending would rise 8.4% – the slowest pace since the 2009 financial crisis.

The report said, “With digital now more than two-thirds of total advertising, digital growth at historic double-digit rates has become difficult to achieve, and we expect digital to decelerate further over the next five years.”

YouTube Cracks Down on Ad Blockers Amid Falling Revenues

YouTube’s revenues incidentally have fallen on a yearly basis for the last three quarters. In Q1 2023, its revenues fell to $6.69 billion – as compared to $6.87 billion in the corresponding quarter last year.

You Tube's ad reveneus have fallen
Source: Statista

YouTube is focusing on “Shorts” to fend off the competition from TikTok.

Alphabet, which is YouTube’s parent company, is up about 37% so far in 2023. The stock is slightly underperforming the Nasdaq 100 and it is the worst-performing FAANG stock of the year.

Alphabet’s underperformance might look somewhat intriguing as there has been a broad-based rally in tech stocks in general and AI plays in particular.

Nvidia whose chips are crucial for building AI models, and C3.ai which is among the rare pure-play listed AI stock have tripled this year and the former became the latest entrant to the $1 trillion dollar market cap club.

Alphabet Stock Has Underperformed in 2023

While Alphabet is also working on its Bard chatbot to take on OpenAI’s ChatGPT, markets fear that the company might lose market share in the online search market to Bing.

Notably, Google’s ad revenues have fallen YoY for two consecutive quarters. The company’s overall revenues meanwhile still grew YoY – thanks to the continued growth in its cloud business.

Alphabet revenue estimates
Source: TIKR

Analysts expect Alphabet’s total revenues to rise only 5.9% this year which would mean a second consecutive year of single-digit growth.

Analysts meanwhile expect the company’s revenues to rise by 11.3% next year.

According to the report that’s titled “Digital 2023 April Global Statshot,” 13.6% of working professionals aged between 16 to 64 said that their company uses YouTube for social media marketing.

Facebook is the favorite when it comes to social media marketing and 21.5% of respondents said that their company used the platform for marketing.

social media marketing by different platforms
Source: Datareportal

Instagram and WhatsApp – which are also owned by Facebook’s parent company Meta Platforms came second and third respectively at 18.2% and 16.6%.

Meta is also looking to capitalize on the growing disenchantment with Twitter and has launched Threads as an alternative to the microblogging site.

Coming back to YouTube, the company cracking down on ad blockers comes at a time when Alphabet is under pressure from stockholders to improve its earnings and cut down on losses in its emerging businesses – including autonomous driving.

YouTube has incidentally already increased the ad load on YouTube and is aggressively pushing its premium subscription which Insider Intelligence estimates could bring in $2.71 billion in revenues this year.

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