Dive Brief:
- Google's parent company Alphabet yesterday surprised analysts by revealing YouTube's advertising sales for the first time. The popular video-sharing site's revenue rose 36% to $15.1 billion in 2019 from a year earlier, per a year-end report. That growth outpaced the 15% gain of Google's search ad revenue to a record $98.1 billion for the year.
- For Q4, Google's total ad revenue including YouTube and its digital ad network increased 17% to $37.9 billion from a year earlier. That growth matched the 17% pace of the prior quarter, indicating that Google's total ad growth has steadied with the maturation of the digital ad market. Alphabet's total revenue of $46.1 billion missed analyst estimates of $46.9 billion, while earnings of $15.35 a share beat estimates of $12.53 a share, CNBC reported.
- Alphabet for the first time also revealed revenue from its cloud computing business that competes with Amazon Web Services and Microsoft Azure, among others. Google Cloud's revenue jumped 53% to $2.61 billion in Q4 from a year earlier, a significant bright spot for the search giant.
Dive Insight:
Alphabet's more complete disclosures help to end a multiyear guessing game into the ad growth for YouTube, which consistently ranks as one of the most popular mobile apps in the world. YouTube is a growth engine for Google's ad business as more people consume video on mobile devices. YouTube's results indicate that Google makes less than $8 a year for each its 2 billion users, The Wall Street Journal reported. Facebook last year made about $25 per person among its family of apps that have a total 2.26 billion users, although the results may not be directly comparable.
"YouTube is growing strongly according to this report, and revenues are above where eMarketer had thought they were," eMarketer analyst Nicole Perrin said in emailed statements to Marketing Dive. The researcher estimated YouTube's ad sales had grown 20% to about $11.4 billion by the end of 2019. Perrin said Google changed some of its disclosures on ad revenue and traffic acquisition costs, making comparisons with prior periods difficult.
Google's total ad growth of 17% was steady with the prior quarter, although it was less than Facebook's 25% growth to $20.7 billion and Amazon's 41% gain to $4.8 billion. Facebook is a younger company and Amazon is a relative newcomer to digital ad sales, helping to explain why their ad sales growths were greater.
