Google cruises the resurgence of digital advertising and the interests of retail clients

Alphabet reported total revenue of approximately $ 61.9 billion in the second quarter of 2021, an increase of 62% over the previous year. The company’s second-quarter profit surged from $ 7 billion in 2020 to $ 18.5 billion this year.

Amazing growth rates can be misleading. The second quarter of last year was a catastrophe. Alphabet (or earlier Google) reported a decline in annual revenue for the first time. In addition to last year’s pandemic outbreak, Google unexpectedly recorded nearly $ 1 billion in savings when server equipment exceeded expectations in terms of usable life, according to CFO Ruth Porat.

She predicts growth based on strong returns on digital advertising revenue in the first half of this year, given that rising coronavirus case rates may not recover and advertising growth may not continue at this pace. Warned against.

But even that single grain of salt was a big quarter for Google.

One investor said that Google Search hasn’t seen this level of growth for years, even after looking at the two-year growth rate.

“Our strong second quarter reflects the growing online activity of consumers and the broader power of advertiser spending,” Pichai said.

However, there are certain advertising growth opportunities that stand out in Google’s revenue.

The big ones are retail and e-commerce.

Chief Business Officer Philip Schindler said retailers were the company’s largest growth driver in paid search revenue, jumping from about $ 16.2 billion in the second quarter of 2020 to $ 29.2 billion. Retail also contributed significantly to the overall increase in advertising.

According to Schindler, Google Cloud Platform is adopting many new retail clients. These retailers are developing increasingly valuable search businesses as more customers shop online. He also pointed out integrations with e-commerce site operators and payment processors: Shopify, Square, GoDaddy and WooCommerce last quarter.

“There’s a lot of room for e-commerce on YouTube,” said CEO Sundar Pichai. In the second quarter, the company allowed YouTube sellers or creators to upload product catalogs that appear with content. Payment processing partners or Google can convert instant sales.

YouTube itself is the main growth channel. YouTube’s second-quarter advertising revenue surged from $ 3.8 billion last year to $ 7 billion.

Apart from the shopping integration, more than 120 million people watched YouTube on their smart TVs this quarter, Schindler said. This is an increase from 100 million a year ago.

“CTV is the fastest growing consumer service we have,” he said.

Google also emphasized partnerships with creators and publishers. In the last three months, Google has paid YouTube creators more than any other quarter, according to Pichai. Google also sent more traffic to third-party sites in the network than in the previous quarter. Given that the summer season of the second quarter is usually not the busiest period on the Internet, it is a sign of strong growth.

Schindler says that despite the significant increase in search revenue already this year, the results are still poor, especially in the commerce space. Sponsored product advertising, which drives Google’s search revenue, is one of the areas of recent success. Google is also in a position to pull in the retail marketing budget historically spent on coupon campaigns and local store sales.

“89% of commerce is still done offline,” he said. “There is still room to leverage the budget that was traditionally used for local advertising, etc.”

Google cruises the resurgence of digital advertising and the interests of retail clients

Source link Google cruises the resurgence of digital advertising and the interests of retail clients

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