Google ad sales increase 32% amid renewed strength in digital media

Dive brief:

  • Google’s ad revenue surged in the first quarter, indicating a strong recovery in the digital advertising market, with brands expecting consumer demand to increase in a reopened economy. Parent company Alphabet said revenue jumped 34% from a year earlier to $ 55.31 billion, while Google ad sales rose 32% to $ 44.68 billion .
  • YouTube’s ad revenue jumped 49% to $ 6 billion, a growth rate that exceeded the 46% gain recorded in the previous quarter. YouTube Shorts, the video-sharing site’s response to social video app TikTok, saw daily views growth of 86% to 6.5 billion in March, from 3.5 billion at the end of 2020, said Alphabet CEO Sundar Pichai on a conference call. with analysts.
  • Google’s increase in ad revenue shows the search giant continuing to recover from a slump in the second quarter of last year, when it reported the first decline in ad sales in 26 years of story in the context of a larger decline in advertising spending during the pandemic. The second quarter drop gives Google a weaker hurdle to jump this year.

Dive overview:

Google’s strong ad revenue gains show marketers gaining confidence in the ongoing recovery from the pandemic and seeking to reach consumers as they spend more time with its services to shop online, order of food to deliver or watch videos on YouTube.

“In the first quarter of research, we saw continued strength in most categories, led by retail,” said Philipp Schindler, senior vice president and CBO of Alphabet, during the call with analysts. “We also had strong performances in the technology and CPG areas. On YouTube, we have experienced phenomenal growth driven by direct response, followed by continued brand strength.”

The company is seeing a resurgence of consumer interest in the travel category as people use Google to plan their next trips, he said. To support that growth, Google last month allowed hotels and travel agencies to list their booking links for free, echoing a similar decision for purchases last year. As retailers faced a decline in foot traffic in physical stores, Google made product listings free, eliminated commission fees, and opened up its shopping platform to e-commerce software provider Shopify and the payment company PayPal.

“Over the past six months, people’s shopping preferences have constantly changed in response to changing conditions. It’s not just online. It’s not just offline. It’s a mix. “said Schindler, noting the current trend to search” available near me “and curbside pickup. “This trend has not changed. Searches for premises and businesses are up 80% from last year. Omnichannel is here to stay.”

Dick’s Sporting Goods saw online sales double last year by highlighting curbside pickup, in-store pickup and in-store shipping options in Google Search, and launched a campaign on YouTube to publicize its new store concepts, says Schindler. He also noted that craft retailer Michael’s has seen 350% growth in e-commerce and showcased its omnichannel execution on Google Search and Maps.

YouTube was again a big driver of ad revenue as more people watched the video-sharing site on Connected TV (CTV) and over-the-top devices. While most YouTube viewing time takes place on mobile devices, the video-sharing site’s share of CTV and over-the-top (OTT) viewing time rose to 34% in Q3 2020, from 27% in Q4 2019, according to data from the digital talent network Collab. cited by eMarketer. This growing presence on the biggest screen of U.S. homes positions YouTube for further revenue growth as marketers seek to gradually reach target audiences with more personalized ads.

Looking ahead, Google faces the possibility of further changes in consumer behavior as pandemic lockdowns are lifted and many people return to their old activities like going to the office or school. The return to pre-pandemic behaviors may mean that people are spending less time with digital media.

“In the first quarter, we continued to benefit from high online activity for consumers and widespread strength in advertiser spending,” said Ruth Porat, Alphabet’s chief financial officer, during the call. “It is too early to tell how sustainable this consumer behavior will be as economies recover and mobility restrictions are lifted.”

Source link