Alphabet Reports: Google Search Helps Drive Q1 2020 Revenue

Alphabet, Google's parent company, released first-quarter 2020 earnings Tuesday, and answered one of the biggest questions shaking the advertising industry -- how badly the pandemic hit its ad business.

“Given the depth of the challenges so many are facing, it’s a huge privilege to be able to help at this time,” stated Sundar Pichai, CEO of Alphabet and Google. “People are relying on Google’s services more than ever and we’ve marshalled our resources and product development in this urgent moment.”

Google Search, YouTube, and Cloud drove Alphabet’s revenue to $41.16 billion for the quarter -- up 13% compared with the year-ago quarter, or 15% on a constant currency basis.

Performance in these sectors supported declines during the first two months of the quarter, but then in March the company experienced a significant slowdown in ad revenue.

Google advertising generated $30.5 billion in first-quarter 2019, rising to $33.8 billion in first-quarter 2020 quarter.

Google-owned properties generated $25.6 billion for first-quarter 2019, rising to $28.5 billion in first-quarter 2020. YouTube advertising revenue came in at $4.04 billion, and cloud revenue was $2.78 billion for the quarter.

And while revenue slightly climbed, growth slowed. "Google reported a significant deceleration in search ad revenue growth to single digits, which suggests a serious hit to the growth of their search business due to COVID starting in mid-March or later, but not as severe as it could have been," wrote eMarketer Principal Analyst Nicole Perrin, in an email to Search Marketing Daily. "The deceleration to Google's display ad businesses, including Google Display Network and YouTube, was lower, and again fell in line with our relatively optimistic scenarios for digital advertising in Q1."

Perrin wrote the numbers suggest a "cautiously optimistic outlook for Q2," which could show slower growth.

Performance marketing agency Merkle tried to estimate Google’s earnings early today when it identified a clear immediate impact from COVID-19 on travel search budgets.

Google search ad spend by travel advertisers -- which had the most difficult time due to the pandemic -- fell 21% YoY in first-quarter 2020, dropping 38 points from 17% growth in fourth-quarter 2019.

By March 16, travel spend fell more than 60% from January levels. 

Retail spend trended flat to higher since early March. Spend and click growth decelerated sharply in the second half of March as the first major wave of coronavirus-related closures and restrictions began to roll out

Merkle expected spend on paid search ads in the U.S. to grow 12% Y/Y in Q1 2020, down from 16% growth in Q4 2019. The agency also expected the average CPC growth to decelerate between the fourth-quarter 2019 and the first quarter of 2020, coming in roughly two points lower at a little over 4% YoY.

Merkle estimates that Google generated 96% of organic search visits in first-quarter 2020 on mobile. Desktop share of organic search increased slightly in the past year, rising to 44% in first-quarter 2020. Desktop accounted for only 32% of search ad clicks in first-quarter 2020.

Next story loading loading..