What Advertisers Should Note From Google Parent Alphabet's Second-Quarter Earnings
July 24 2017 - 7:00PM
Dow Jones News
By Jack Marshall
Google's parent company Alphabet Inc. posted yet another period
of strong growth in the second quarter, with revenue jumping 21% to
$26 billion.
The results suggest Google's ad business is humming along nicely
despite recent concerns from some advertisers about where it's been
placing their ads.
Here are the most important advertising-related takeaways from
the search giant's earnings conference call:
What brand safety issues?
So far, there's no evidence that Google's recent "brand safety"
challenges have had an impact on its ad business.
The company came under fire in March for allowing ads to run
alongside objectionable content -- including extremist video on
YouTube -- prompting major advertisers including Wal-Mart Stores
Inc., AT&T Inc. and J.P. Morgan Chase & Co. to say they
held back spending from YouTube and other Google services. Some
advertisers say have since returned to YouTube, while others say
they have stayed away.
Google made no reference to the issue on its earnings call this
time around, with Alphabet CFO Ruth Porat stating instead that
YouTube made a "healthy contribution" to its ad revenue growth
between April and June.
CEO Sundar Pichai said "hundreds of brands" are now buying video
ads through its Google Preferred product, which it says places
alongside YouTube's most premium content.
YouTube hits the living room
Much has been made about the potential for digital video
services such as YouTube to displace traditional TV, and Google
says it's making some progress when it comes to grabbing users'
attention in the living room.
Google CEO Sundar Pichai said the fastest growing screen for
YouTube is in the living room, and noted that YouTube now has 1.5
billion monthly viewers across all devices, with an average viewing
time of 60 minutes a day. The company launched its own over-the-top
linear TV service, YouTube TV, earlier this year.
Mobile search is booming
Industry observers once questioned Google's reliance on desktop
search and its ability to shift its business to mobile. According
to Google, that transition is going great, with "tremendous results
in mobile" search now helping to drive its ad revenue growth.
"We're really pleased with our ongoing efforts there," Ms. Porat
said, adding that there's no single change that is helping to drive
its business on that front beyond growing user adoption.
"It's a lot of small incremental efforts that in aggregate
continue to allow us to benefit from a really nice underlying
secular trend," she said.
Connecting online to offline is still a big opportunity
Google and its competitors have for years attempted to
understand the link between users' online behaviors and their
offline actions and purchases. According to Mr. Pichai, the company
continues to see that area as a big opportunity for Google.
"With 90% of transactions still happening offline, we want to
help consumers find what they're looking for in brick and mortar
stores," he said.
Write to Jack Marshall at Jack.Marshall@wsj.com
(END) Dow Jones Newswires
July 24, 2017 18:45 ET (22:45 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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