Google’s dominance in the advertising market isn’t going anywhere.
The search engine’s parent company, Alphabet Inc., pulled in $26.6 billion in revenue from Google advertising during its first quarter ended March 31, a 19.6 percent increase over the same period last year.
Advertising is the company’s main source of revenue, making up about 97 percent of Alphabet’s total revenue, which grew 26 percent to $31.14 billion during the quarter. Net income came in at $9.4 billion, an improvement of 18.5 percent.
Traffic acquisition costs also grew, however, hitting $6.29 billion, an increase of 21.6 percent. The quarter’s total traffic acquisition costs equal 24 percent of revenue, compared with 22 percent a year ago. Google also shifted this quarter to a monetization method for its ad network based on impressions, instead of clicks.
Ruth Porat, Alphabet and Google’s chief financial officer, said during a call with financial analysts that growth during the quarter “reflects our momentum globally” and noted that mobile search, which carries higher traffic acquisition costs, is continuing to grow.
“We’re excited by the still sizable opportunity in search advertising led by mobile…we continue to benefit from our investments to enhance our user and advertiser experience,” Porat said.
“For me, mobile obviously raises the bar,” added Sundar Pichai, Google’s cofounder and chief executive officer. “And if you look at the evolution of search…we evolved from just providing links to answers. At a high level the next big evolution we are doing as part of mobile search and assistant is to actually help users complete actions, to help get things done. And it’s really hard to do at scale, but that’s the work we are doing. And as we do that, it’ll impact not just the Assistant, but mobile search more broadly. And obviously, that has a commercial impact as well. So we continue to be very excited about the opportunities there.”
But with Facebook being dragged into the headlines by continued revelations around its news feed and its sale of user data — which saw Mark Zuckerberg testify on Capitol Hill — Pichai took the opportunity to highlight Google’s efforts to “elevate and strengthen quality journalism,” starting with a $300 million investment that will see a number of news and publisher products released.
The first is a tool that allows people to use their Google account to buy a news subscription with a participating news site, which Pichai said has seen “overwhelming interest” from more than 300 publishers so far.
Pichai also pointed out that Google continues to “invest in ways to give people granular and easy controls over their information across all of our products.” He said that each day 20 million people visit their “my account” page on a Google product, where privacy and ad settings can be changed.
As for YouTube, which has come under fire recently for extreme content that promotes false news and conspiracies, Pichai said the company is “very focused on making sure that YouTube remains a safe platform with great content.” He said last quarter more than 6 million videos were removed after being first identified by machine-flagging systems, most of which before they were ever viewed.
But Google is still focused on developing products, like its Home voice assistant, which Pichai said is “super popular” and can now can help with 1 million actions. It’s also being made available in more countries, recently launching in India and Singapore.
“Google Home gives rise to a lot of new and unique use cases,” Pichai said. “Actions are a big part of it…We see this as a good, complementary thing. You will see search embrace some of the capabilities you find in Google Assistant and Google Home and vice versa…we are definitely just getting started there.”
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