December 4, 2021

Earn Money

Business Life

Google suffers ‘significant and sudden’ advertising slowdown

Google has suffered a “significant and sudden slowdown” in advertising revenues as the coronavirus hit marketing budget, its parent company Alphabet has revealed.

Ruth Porat, Alphabet’s chief financial officer, said the company’s financial performance was strong during the first two months of the year but took a nosedive in March as the global economy ground to a halt.

She said advertising revenues from its dominant search engine dropped by a “mid-teen percentage” at the end of the month, despite an increase in searches and that the company was expecting the next three months to be “difficult”. 

“We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities,” Porat said.

It came as the company said revenues in the first quarter of 2020 had risen 13pc to $41.2bn (£33bn).

The company’s quarterly profits were $6.7bn, only marginally higher than last year. It would have reported a drop in profits, were it not for last year’s $1.7bn fine from the EU for unfair advertising practices.

Advertising revenue from small and medium businesses is one of the biggest earners for Google parent Alphabet, which includes YouTube, a line of phones and home speakers and X, a secretive entity for high risk ideas like self driving cars and renewable energy sources. 

Technology Intelligence newsletter – UK

Early in the pandemic it handed out hundreds of millions in credits to smaller customers, in the hope it would stimulate sales.

Google’s YouTube division grew revenues from $3bn to $4bn, and Google’s cloud business, which it hopes will take on the likes of Amazon Web Services and Microsoft Azure, took home $2.7bn in the first three months of the year. Alphabet broke down revenue between YouTube and its cloud business for the first time earlier this year.

Investors had already grown jittery after Alphabet reported lower than expected sales, causing concern its digital advertising growth had peaked. Last night, shares climbed by around 3pc, with results slightly better than analysts had expected.

Source Article