Despite the growing traffic on places such as Facebook and Google, ad revenue has been falling for all major companies around the world. That is largely because either businesses are shutting down or the surviving ones are cutting back massively on marketing expenses. However, Alphabet Inc., Google’s parent company, reported that advertising at the platform increased by “double digits”, despite of the economic impact of the coronavirus for Q1’20.
Google’s ad business, which made up for 83% of Alphabet Inc.’s revenue last year, was up about 10% from last year’s first quarter, ending up at $33.8 billion. Google’s ad revenue comes from a multitude of sources: through ads posted on Google searches, Youtube videos, Duo-the video calling app by Google etc.
However, contrary to the growth that ‘Google’ posted in the first quarter, ad revenue for Google searches declined. While users were seen making more searches, the percentage of ‘commercial searches’ declined. Alphabet Chief Financial Officer Ruth Porat said, “…search ad revenue had declined by a “mid-teens percentage” by the end of March compared with a year earlier.” He also anticipated a slower Q2, saying “As of today, we anticipate the second quarter will be a difficult one for our advertising business.”
Youtube ad revenues on the other hand, made up for a big chunk of the growing ad revenue business, defying all odds and actually posting growth. While Youtube premium is a thing, where users can buy a subscription for additional content and functionality on the platform, most of Youtube’s revenue comes from its ad business.
Youtube also put a cap to the maximum quality of streaming available at the platform, limiting it to only SD to reduce its bitrates.
All of this together put Google’s combined ad revenue at $33.8 billion, up about 10% from last year’s first quarter. The growth rate was ‘low’, to put it mildly. But considering how the resultant economic catastrophe from the coronavirus pandemic has rendered some of the biggest companies unviable, Google’s position, like most internet-based businesses, is relatively stable.
Google has also made a change in its algorithm, where most of the ad postings from search results on the platform have been made free, at least in the US. The company plans to roll this feature out globally soon, which is a plea to prevaricate a catastrophic slowdown in ad business from the company.
Cloud Services made up for 5.5% of Alphabet Inc.’s revenue last year. The company has extended those services, free of charge, to research institutions and government facilities to uncover trends about COVID 19. Still, the demand for paid services also surged, leading to the cloud business generating about $2.8 billion in revenue, up 52% from a year ago.
All in all, Alphabet posted an overall revenue of overall revenue , up 13% compared with the same period last year. This put Q1 profits at $6.8 billion, or $9.87 per share, compared with the analysts’ average estimate of $7.21 billion, or $10.40 per share.
The announcement lead to Alphabet’s share rising by 4%, to $1,282.
