GOOG Alphabet Inc

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)

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