Alphabet talks up ‘incredible momentum’ in advertising as ‘moonshot’ YouTube booms

Google parent Alphabet talked up the success of YouTube and said the shift to mobile is helping it better understand its users despite sales disappointing analysts in the first quarter.

For the three months to the end of March, Alphabet’s revenues rose to $20.26bn – up from $17.26bn a year before. This, however, fell short of expectations of around $20.4bn, with Alphabet’s share price falling 6% in after-hours trading as a result. This equates to a $32bn drop in market value.

It wasn’t all bad news for the Google and YouTube owner. Alphabet’s advertising revenue jumped 16.2% in the first quarter to $18.02bn, with its number of ads, also known as paid clicks, jumping 29%. But the average price of online ads, known as cost-per-click, fell 9% in the quarter.

In an analyst call, Google’s CEO Sundar Pichai was keen to talk up the positives.

“On the content side, we are seeing great traction on Google Play and YouTube. Both, and in particular YouTube, still have incredible momentum, and we continue to invest heavily here,” he said.

“What seemed like a moon shot a decade ago has grown into a booming community of engaged users, creators and brands, unlike any other video platform. YouTube on mobile alone now reaches more 18-to-34 and 18-to-49 year olds in the US than any TV network -broadcast or cable.”

READ MORE: YouTube attacks brands’ TV ad spend with claims it can offer better ROI

Pichai said Google still continues to offer marketers “the best in mobile ad formats, reach and the leading measurement solutions”.

He said newer ad formats – such as Customer Match – were also offering brands guaranteed ROI.

“Thanks to our unique interim signals, we are able to connect marketers with the right customer precisely at the right time. A new example of this is Customer Match, which helps brands reach their most valued customers on Google Search, YouTube and Gmail, with highly relevant and targeted ads,” he explained.

“After using Customer Match to reactivate their loyal customers, specialty retailer Williams-Sonoma reported a 50% lift in revenue compared to previous campaigns that didn’t use Customer Match.”

Historically, a weakness of Google has been that it doesn’t have as many signed in users as rivals such as Facebook so therefore lacks personal information to deeply engage. But Pichai says mobile is helping it to address this weakness.

Pichai explained: “We are seeing a tremendous shift towards mobile. It’s in many of these products. We are already over 50% of these users, which are coming from mobile. And in Mobile typically, all users are signed in. And so I think over time as the shift continues, I think we have a user base which is signed in. And so that’s the way we think about it.”

According to Alphabet, over 1 billion people now access its Chrome web browser each month on mobile devices. And Pichai said that Google will next focus on improving the user experience on mobile by tapping into users’ love for swiping while using its services.

He added: “Mobile is an entirely different paradigm and so a lot of things are counter-intuitive. So, for example, users are very comfortable swiping on mobile. So we deeply think about these things, and I’m very comfortable about how we are planning this for the very long-term.”

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