Google Advertising Revenue Reaches $18 Billion On Strong Mobile, Search

Alphabet and Microsoft reported earnings Thursday, with each providing their own perspective of positive news. Advertising revenue from Google in the first quarter of 2016 rose 16% to $18 billion, compared with the year-ago quarter, driven by strong advertising sales on mobile devices. Microsoft touted Bing's growth in the past six years, and the third-party agreements with companies like Apple and AOL. 

Revenue from Google's Web sites rose 20% to $14.3 billion. Google's network member Web sites rose 3% to $3.7 billion. Segment revenue rose 17% to $20 billion, and Google's other revenue rose 24% to $2 billion.

Aggregate paid clicks in the first quarter of 2016 rose 29%, compared with the same quarter in the prior year, but fell 3% sequentially. The cost per click (CPC) fell 9% from the year-ago quarter and came in flat compared with the fourth quarter in 2015.

Paid clicks on Google Web sites rose 38%, compared with the same quarter in the prior year, and fell 4%, compared with the prior quarter.  The CPC fell 12%, compared with the year-ago quarter, and rose 2% compared with the fourth quarter in 2015.



Paid clicks on Google Network Member sites rose 2% YoY and 4% compared with the fourth quarter in 2015. The CPC fell 8% and 12%, respectively.

Overall, Alphabet reported first-quarter 2016 revenue rose 17% to nearly $20.3 billion, up from nearly $17.3 billion in the year-ago quarter. Google's portion of total revenue earned reached $20 billion for the three months ending March 31, 2016, up from $17.2 billion for the year-ago quarter.

“Our Q1 results represent a tremendous start to the year with 17% revenue growth year-on-year and 23% growth on a constant currency basis, said Ruth Porat, CFO of Alphabet, who added building new technologies "positions us well for long-term growth.”

Google will generate $57.80 billion in total digital ad revenue worldwide in 2016, up 9% compared with 2015, according to eMarketer. The analyst firm estimates Google will take 30.9% of the global digital ad market revenue.

About $47.57 billion in search ad revenue worldwide, or 55.2% of the search ad market, will belong to Google this year, per eMarketer.  

Microsoft also reported Thursday that earnings for the first quarter of the calendar year, ending March 2016, but the news wasn't quite as good. Overall, revenue fell to $22.08 billion, on a non-GAAP basis, yielding EPS of 62 cents.

The company's More Personal Computing (MPC) segment, which contains Windows, devices, gaming and search generated $9.5 billion, down from $12.7 billion in revenue for this group compared with the prior quarter. 

Overall, revenue fell, but Microsoft points to Bing as a bright spot. Six years after its launch, Bing continues to increase its U.S. and global search engine market share.

Search advertising revenue excluding traffic acquisition costs grew 18% in constant currency with continued benefit from Windows 10 usage.

Bing Network now makes up 31.1% of the U.S. PC search market, 17.3% of the U.K. market and 11% worldwide.

Some 16 billion monthly searches occur on Bing globally.

Windows 10 adoption, more than 270 million devices, has helped fuel growth and create opportunities across the Microsoft ecosystem

Growth also has grown through third-party partnerships. Bing powers Cortana, web search results for Siri and Spotlight on Apple devices, default search on Amazon kindle devices and Echo app, AOL web search and Uber mapping.

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