Alphabet’s revenue from its Google advertising division rose 17% year-over-year (YoY) for the fourth quarter in 2015 to $19.078 billion, driven by a declining 13% cost per click, compared with the same quarter in the prior year.
Separating Google from "Other Bets" shows a better-than-expected sales and profit for the fourth quarter. Google taking investments from its search business and pouring it into experimental projects has left investors with little clarity and search marketers with doubts.
Alphabet's profit took a hit from the company's restructuring efforts during the fourth quarter of 2015, per analysts. It would have reported earnings of $6 billion if not for the restructuring, and a $3.6 billion loss from Alphabet's "Other Bets" businesses.
The cost per click on Google Web sites fell 16%, and CPC on Google network member Web sites fell 8% YoY, but rose 7% compared with the prior quarter, according to Alphabet.
The company reported that aggregate paid clicks rose 31% in the quarter compared with the year-ago quarter, while paid clicks on Google Web sites jumped 40% and paid clicks on Google network member Web sites rose 2% YoY.
Mobile search, YouTube and programmatic advertising drove revenue for Google, according to Ruth Porat, CFO of Alphabet. The company broke out most businesses, but, not surprisingly, failed to breakout programmatic.
eMarketer estimates that YouTube ad revenue rose 40.6% last year, reaching $4.28 billion worldwide, as more consumers relied on the video site to compare products gain information on gift options for the holidays.
This past holiday season consumers replaced shopping moments, which replaced shopping marathons. Some 30% of all online shopping purchases on Google now happen on mobile phones.
Google is forecast to capture $45.58 billion in search ad revenue in 2016, or 55.6% of the search ad market worldwide, according to eMarketer.
Google may lead in search, but it trails in display ad revenue to Facebook, per eMarketer, generating $10.21 billion in display ad revenue worldwide this year.
Unusual in this reporting quarter, Alphabet separated Google's advertising business from Other Bets, which reported a $3.6 billion loss on its non-advertising ventures in 2015. Other Bets include Nest home automation, and Google Fiber home broadband initiative.
Overall, revenue in the three months ended in December rose 18%, YoY to $21.329 billion, EPS at $8.67.
Nest, Fiber are two of the three companies within "Other Bets" that brought in the majority of the revenue, Porat told analysts and investors during the earnings call.