How programmatic, YouTube and mobile search are boosting Google’s revenues

Google has credited the shift towards programmatic advertising among brand advertisers, as well as YouTube and mobile search, for an 11% revenue boost in its second quarter.

Google

Revenue rose to $17.7bn, with the search giant claiming that total would have been even higher if it weren’t for currency fluctuations. Profits climbed to $3.93bn, from $3.35bn a year ago.

Google said ongoing momentum in its core search business, particularly in mobile, was complemented by significant growth in YouTube revenues. The company also claimed it is also benefitting from the shift to programmatic as more brands test out the new technology.

Speaking on the company’s earnings call, chief business officer Omid Kordestani said: “Our performance really reflects the fact that we have a diverse set of products that are doing well. We have strength in core search obviously and in particular mobile, YouTube and programmatic we’re seeing a lot of strength.”

‘Brands following consumers to YouTube’

It’s no secret that YouTube is going after TV. While Google wouldn’t break out specific YouTube revenues, Kordestani said YouTube viewing is growing at the fastest rate for a couple of years, with watch time up 60% year on year.

The average mobile viewing session grew by 50% to more than 40 minutes while the number of users coming direct to YouTube’s homepage “in the same way they might turn on their TV” was up three times year on year.

As more viewers head to YouTube, brands are following suit, claimed Kordestani. He said the number of advertisers running video ads on YouTube is up by 40% and for the top 100 advertisers the average spend is up 60%.

“As consumers contine to shift their content consumption from television to digital, brand dollars are following,” he said.

Ruth Porat, Google’s new CFO added: “Our focus is the opportunity to get the larger budgets to move to YouTube.”

Narrowing the revenue gap between desktop and mobile

Google has struggled as users go mobile, not with scale but with the fact that cost per click (CPC) rates are typically lower on mobile devices than desktop. Currently more than half of searches in developed internet economies such as the US and UK are done on mobile, where it doesn’t earn as much revenue.

CPC rates – how much Google charges for ads – were down 11% in the quarter. Part of the problem is that shoppers still prefer to make purchases on desktop rather than mobiles.

Google has ramped up its mobile advertising efforts, introducing a “buy” button and mobile-friendly YouTube ads.

Ruth Porat, Google’s new CFO, said mobile CPCs are up while desktop is not declining “so the gap is narrowing”. She said Google is focused on making sure it has the right ad formats and measurements so it can tie together the online and offline worlds more accurately – from estimated store visits to app installs and cross device conversions.

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