RECESSION WARNING: My YouTube Income Is Crashing

What's up, Graham? It's guys here. So, things are getting serious, and we have a lot of indicators that would point to a potential recession. For example, it's shown that a lack of conferences tends to coincide with a slowing economy. Exotic dancers say that a recession is already guaranteed because the clubs are suddenly empty. And you know things are getting serious when Cardi B posts on Twitter asking when they'll finally admit that we're currently in a recession.

Although I wanted to comment on something slightly different that might give us a real-time view into the spending habits of some of the biggest companies in existence, and that would be my declining YouTube ad revenue. No, seriously. Throughout the last few days, several creators have discussed their declining YouTube ad revenues, a sign that businesses are scaling back. Customers have less money to spend, and that could be a sign of a potential recession. So, I thought I would throw my hat into the ring, share my own ad revenue numbers dating back to the very beginning, and get to the bottom of plummeting YouTube ad revenue in relation to a recession.

Whereas Jamie Dimon calls it an economic hurricane, I could flat-out say it: my YouTube ad revenue is substantially low, more than where it was at the peak. When you dig into the numbers, it could be an indicator that the rest of the economy is about to follow. But before we start, if you appreciate this type of transparency, it would mean a lot to me if you crashed that like button for the YouTube algorithm by giving it a gentle tap. Plus, as a thank you for doing that, here's a picture of a pug. So, thank you guys so much, and now with that said, let's begin.

Alright, so as a starting point, I've always been extremely upfront with how much I make here on YouTube. In my early days of 2017, I made twenty-six thousand nine hundred and sixty-six dollars and sixty-nine cents—nice—posting an average of three videos a week with four million views at a CPM of roughly 11.77. Back then, to me, that may as well have been a million dollars because the idea of being able to make an extra 20 to 100 a day in magical internet money was such a foreign concept. But I loved making videos, and over time the finance community began to grow.

In 2018, I continued on the same schedule, posting three times a week, and lo and behold, my total ad revenue was 170,945.60 cents with 14 million views at an average CPM of 20.81 cents. Now, the CPM is a very important number to keep an eye on because that translates to how much advertisers are willing to pay for every 1,000 views. Generally, this is a number that could fluctuate over time as companies increase their ad budgets towards the end of every quarter and every year. And it could also change based on the subject matter of your content.

For example, if I went from talking about investing to video games, the advertising revenue would drop substantially based on who's watching my channel. But since my content has been focused on the exact same niche for over five and a half years, this gives us a realistic foundation from which we could build on to determine whether or not this is an indication of a recession. And just wait—it gets better.

In 2019, the channel received almost 80 million views, all thanks to such classics as "Why Won't I Be Getting the Apple Credit Card," "Meet the 250 Million Dollar Man," "How I Bought a 78 Tesla," and "How I Bought This House for Zero Dollars." That, in addition to posting consistently three times a week, earned just over 1.1 million dollars at a CPM of 26.70. Now, 2020 was an interesting year. Initially, it started off really strong with the CPM as high as 33 dollars. But when the pandemic hit, everything went downhill.

In March of 2020, sponsorships decided to abruptly pause their integrations. CPMs plummeted 50% to a channel low of 16. So during the lockdown, since I couldn't show property as a real estate agent, I used that extra time to double down on my efforts here. Unbeknownst to me, Jerome Powell came to the rescue. CPMs quickly recovered and reached a high of 47 by the end of the year, with an average CPM of 28.11. That resulted in over 2 million dollars of ad revenue for more than 130 million views, and to say that was an utter shock would be an understatement. I was fully prepared for an outright havoc on the economy, so this was not the result I expected at all.

Now, 2021, on the other hand, was actually more of the same. I continued the regular posting schedule of three times a week, and that year we received 108 million views, 2 million dollars in ad revenue, and a CPM of 33.77. However, around November of 2021, something interesting happened. So usually, advertisers ramp up their spending around the holidays, with December being one of the highest-earning ad months on YouTube. But this last year was the exact opposite for myself.

CPMs peaked at 46 dollars just after Thanksgiving on November 26, and then they declined throughout the season that should have been a trend upwards. By the way, just a theory here, but the QQQ also peaked around the exact same time. Coincidence? I think not. Anyway, from there, ad revenue CPMs declined throughout January, plummeting more than usual after Q1 of 2022, and now they're holding steady at a decline of 25% from the peak.

Now, in terms of how this translates to my own payout, here's where things get interesting and where a lot of other creators are beginning to chime in. Since January of 2021, my YouTube ad revenues declined from a peak of 227 thousand dollars to a hundred and twenty thousand dollars. Now, that's certainly not to say that I'm trying to get any sympathy here because that's the last thing on my mind, and it's still a ridiculous amount of money. But in a matter-of-fact way, I find it incredibly interesting in terms of why this fluctuates and whether or not that has the potential to signal an upcoming recession.

For example, it was reported that ad spend was decreasing, with McDonald's having dropped their budget by 50%. Cryptocurrency ads also saw a decline right alongside with Bitcoin as the entire market plummeted. Coinbase, for example, saw a 98% decline in ad spend between February and March, and Crypto.com fell another 68%. Month over month, obviously slowing demand for investment-related products and services combined with companies’ need to scale back is going to lead to less spending and, in turn, less YouTube ad revenue, making people wonder if it's actually a leading indicator to a recession.

After all, it was recently shown that Alphabet expected to report growth at YouTube of 25%. That number came in short at 14%, contributing to a broader revenue earnings miss and a steep drop in Alphabet stock. So in terms of why and whether or not this could be a glaring sign of a recession, here are my thoughts.

First, for advertisers, user tracking is a nightmare. See, when companies create an advertising campaign, they want to see how many new users are generated from a particular source. This is how they'll A/B test audiences, create a budget, and then find the demographic who's most likely interested in what they have to offer. But doing that now is next to impossible to accurately gauge that information. All of this began with an Apple iOS privacy update that requires users to opt into being tracked throughout their browsing.

See, before this change, anytime you would visit a website like Facebook, they would store little bits and pieces of your data, and then after a while, they could build a profile that would predict when and what services you're most likely to purchase. But that abruptly ended with the iOS 14.5 update, which reduces targeting capabilities by limiting advertisers from accessing an iPhone user identifier. In fact, The New York Times reported that only 24% of iPhone users around the world have consented to being tracked by advertisers, meaning if your customer is using an iPhone, there's a good chance they are completely invisible.

Now, this doesn't just impact big tech, but it also impacts mom-and-pop businesses who rely on that tracking to determine whether or not their advertising campaigns are successful. For instance, in terms of myself, every single affiliate link that I have down below in the description had difficulty counting referrals to the point where I was only reporting 30% of the normal traffic that I used to. Obviously, this was a huge problem, and it impacted every single other creator that I spoke to. That means that advertisers could be pulling back because it's difficult to convince the higher-ups that an advertising campaign is working when you can't accurately verify that information.

Second, the TikTok effect. In September, it was reported that TikTok overtook YouTube in U.S. average watch time, and they've just now reported over 1 billion monthly active users with 45% growth year over year. Obviously, it's a format that lends itself really, really well to mindless, addictive scrolling, and I'm sure there's the realization that potentially TikTok could be taking away a large share market from other social media platforms, YouTube included. To me, this is why it makes sense for YouTube to have included a Shorts feature, where you could see more or less similar content within the app to avoid you leaving for somewhere else.

This type of new integration is essential for a company to continue growing. For example, when Snapchat took market share away from Instagram, Facebook fought back, designed their Stories feature, and then left Snapchat in the dust after their update. The way I see it, TikTok is a huge threat to any existing social media platform in terms of watch time. When a large demographic just wants a few minutes to scroll and zone out, that later turns into an hour—brand new short-form viral content seems to be what people are drawn towards. Plus, the watch time numbers don't lie. 40% of Gen Z says that they spend at least three hours a day on TikTok, and guaranteed that takes away from YouTube in one way or another.

And third, for a lot of creators, overall viewership is just down from the pandemic highs of 2020 and 2021. Just from what I've seen, people are spending more time not staying home watching the internet, and that means fewer people to watch videos and fewer people to watch ads. You're also getting people who decide to cut back on spending because inflation skyrockets the cost of everyday items—so much so that one in three Americans earning above two hundred and fifty thousand dollars is reportedly living paycheck to paycheck.

I just believe we saw such a huge increase throughout these last few years that it became inevitable for things to eventually come back down. That type of growth was just unsustainable, and for the time being, we may be entering a time of normalcy in terms of what advertisers are willing to pay. I think that's what we're beginning to see in terms of overall channel revenue.

Even though YouTube AdSense is down, sponsorships are beginning to see a huge uptick because they allow brands to integrate with the creator in such a way that's much more targeted. Now, yes, I have noticed that some companies are reducing their budgets throughout the rest of the year, but others are increasing their ad budgets during a time where there’s a little less competition. Just take OnlyFans, for example: their business is booming during a time where Netflix is stagnating.

From what I've seen, there’s really not a one-size-fits-all approach in terms of sponsorship payments because every company is so fundamentally different. But anecdotally, from my own experience, sponsorships are showing a lot more interest, and that balances out the overall revenue. Not to mention, at least in the finance space, every single channel has seen a decrease in views per video from two years ago simply because people have less money to invest. They're not stuck at home all day, and there isn't much exciting news to report on when compared to what there used to be.

That means that creators either need to post more videos, expand their offerings, or diversify if they want to keep their revenue consistent. And I don't think that's a bad thing, but I also don't think it's a glaring sign of a recession—at least just yet. I just think that’s the natural aftereffect of a stimulus check, shutdown sugar high, and even though advertising is seeing some pullback and some sponsors are a little more cautious, to me, it's still in line with historic averages, and that's just something to keep in mind.

Of course, just remember that this is only one data point, and everyone is going to have their own unique experience. But I hope this helps clarify my thoughts on whether or not YouTube is a leading indicator to a recession. From the way I see it, ad rates are down from the peak, but they're still high all things considered.

So, with that said, guys, thank you so much for watching! Feel free to add me on Instagram. Thank you so much for watching, and until next time.