Google CEO Sundar Pichai gave a clue to the future of search on its first-quarter 2018 earnings call: “You will see search embrace some of the capabilities you find in Google Assistant and Google Home and vice versa.”
The comment was made in reference to an analyst’s question, asking how consumers use Google Home to search for information differs from traditional methods.
“I view this as [an] additive in the long term, and we are definitely just getting started there,” Pichai said.
Mobile search led the way for better earnings results, according to Alphabet, Google’s parent company.
Revenue rose 26% year-over-year to $31 billion in the first quarter of 2018. Google sites' revenue increased 26% to $22 billion in the quarter, led by mobile search, but “complemented” by desktop search and a strong performance from YouTube.
Total traffic acquisition costs (TAC) rose to $6.3 billion or 24% of total advertising revenues and up 36% year-over-year. Alphabet reported that higher TAC in advertising continues to reflect the strongest growth in mobile and programmatic, which carry the highest costs.
“More important than the revenue gains, the big story from the results was the significant rise in expenses, with TAC up more than 36%, including TAC from distribution rising at more than 61% and other direct costs rising at more than 39%,” wrote Brian Wieser, analyst at Pivitol Research, in a research note published Tuesday.
As a percentage of revenue ex-TAC, R&D and sales and marketing expenses rose, while general and administrative fell. A reallocation of depreciation from G&A to other costs was cited as impacting these results, but drivers were associated with data centers, content acquisition, hardware, continued investment in technical talent and advertising spending.
Google’s advertising platforms, such as Google Search and Shopping, are helping customers buy from participating retailers on the Google Assistant and search across mobile, desktop and Google Home.
Early testing showed that participating retailers see an average increase in basket size of about 30%, per Google.
Separately, net earnings for parent company Alphabet soared 73% to $9.4 billion during the first quarter of 2018 -- up from $5.4 billion compared with the same period last year. The company's total revenue for the quarter rose 25.9% to $31.15 billion, up from $24.75 billion in the year-ago quarter.