Dive Brief:
- Google’s revenue derived from advertising rose 10.6% year over year to $72.46 billion in Q4 2024, according to an earnings statement from parent Alphabet. The results missed analyst expectations.
- Video platform YouTube saw ad revenue up 13.8% to $10.47 billion, a deceleration in the rate of growth from the year-ago period. Search and other, Google’s largest segment, was up 12.5% to $54 billion, marking a less significant slowdown in growth.
- Executives explained the unfavorable advertising comps were the result of lapping a particularly strong Q4 2023, which saw high demand from Asia-Pacific retailers. Looking ahead, artificial intelligence (AI) is a strategic priority in 2025, though Google has faced fresh challenges on that front as well.
Dive Insight:
Several of Google’s core advertising pillars grew at a slower rate in Q4 2024 compared to the year prior, a deceleration that came despite offerings like YouTube receiving a major windfall from U.S. elections. Last year’s presidential race delivered nearly double the amount of YouTube ad spending compared to 2020, with the elections category leading the platform’s brand revenue growth in Q4.
Discussing the disappointing results with analysts, Alphabet CFO Anat Ashkenazi said that “the year-over-year comparison in all of our advertising revenue lines was impacted by the increase in strength in advertising revenue in Q4 2023, in part from APAC-based retailers.”
China-based retailers like Shein and Temu have in recent years been a boon to digital platforms like Meta Platforms and Google, investing heavily in ads to reach new U.S. shoppers in search of cheap goods. But some of that momentum may wane as those companies contend with mounting scrutiny and as President Donald Trump instates higher tariffs on their home country.
In regards to search, Google has made its transformation around generative AI a top mandate, installing AI Overviews into the core search experience. The company recently introduced ads to the mobile version of AI Overviews as it ramps up its monetization play around the feature.
AI has also been used to revamp Google’s e-commerce initiatives, which potentially provided a boost around the holidays. Google Shopping received 13% more daily active visitors in the U.S. in Q4 compared to the year-ago period, according to Chief Business Officer Philipp Schindler.
Google’s generative AI bets have been challenged by the fast emergence of DeepSeek, a Chinese rival that boasts similar sophistication at a cheaper cost than U.S. tech giants. Google in December unveiled Gemini 2.0, its most advanced model to date and one meant to serve what CEO Sundar Pichai called the “the agentic era” of the technology.
“As AI continues to expand the universe of queries that people can ask, 2025 is going to be one of the biggest years for search innovation yet,” said Pichai, echoing other executives who view the technology as entering a pivotal moment.
Google is also grappling with the existential threat of dual U.S. antitrust battles related to its search engine and advertising technology. The Justice Deparment in November recommended that Google sell its popular Chrome web browser, a move that would have industry-rattling implications for advertisers.
