Alphabet’s Earnings Report: YouTube Woes and Google Ad Questions – The Buyer’s Journey 48

All this week we’re focusing on the earnings reports of the platforms we work with the most in our advertising campaigns. That includes Facebook, Instagram, Twitter, Google, Snapchat, Amazon, Spotify, and LinkedIn. We’ll be looking at the numbers and explaining what is most important for your marketing campaign. Today, we’re looking at Alphabet’s earnings report, specifically on the Google portion, and we’ve got a breakdown of everything you need to know.

A B C, Easy As One, Two, Three

Here are a couple quick-hit numbers from Alphabet’s earnings report via CNBC.

  • Earnings per share: $11.90 per share, ex-items, vs. $10.61 expected, per Refinitiv survey of analysts
  • Revenue: $36.34 billion, vs. $37.33 billion expected, per Refinitiv survey
  • Traffic acquisition costs: $6.86 billion, vs. $7.26 billion expected, according to FactSet
  • Paid clicks on Google properties: +39%
  • Cost-per-click on Google properties: -19%
  • Revenue increased 17%, down from growth of 28% a year earlier.
  • Ad sales rose 15%, down from 24% a year ago.
  • Paid clicks on Google properties grew only 39% from the year-ago quarter. That’s a sharp drop from the fourth quarter or 2018 (up 66%) and third quarter (up 62%).

The Big Redesign

One of the culprits behind Google’s deceleration is YouTube, at least according to CFO Ruth Porat.

“While YouTube clicks continue to grow at a substantial pace in the first quarter, the rate of YouTube click growth rate decelerated versus a strong Q1 last year, reflecting changes that we made in early 2018, which we believe are overall additive to the user and advertiser experience,” Porat said on the earning’s call.

The initial thought is that some of this drop could have come from YouTube’s algorithm changes early in 2018. The goal of this change was to stop harmful comment appearing in your suggested feed on the right of a video. Of course, there could be other factors, such as the myriad of scandals YouTube had in 2018. According to YouTube, however, removing those bad actors wouldn’t have had such a big effect.

“There’s a misconception that YouTube makes money off of recommending ‘radical’ content, but the truth is that very little of this content makes any kind of meaningful money. In fact, when we cleaned up our partner program to remove bad actors last year, we made it clear that 99% of those impacted creators were making less than $100 a year,” a YouTube spokesperson told CNBC in a statement.

So, what is it then? Len believes that it’s a problem with Google pay-per-click. Specifically, Len says that there’s too much ad inventory and no enough ability to show that inventory. This causes PPC prices to rise, and not all businesses are able to keep up like they used to. However, a solution to this for Google’s bottom line could be the subscription Google My Business service we discussed last week.

Check out our next episode where we’ll discuss a news article covering the Purchase stage of The Buyer’s Journey.

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