Google's ad business beats expectations despite YouTube storm

Dive Brief:

Google’s parent company Alphabet reported in a press release that paid clicks rose 44% during Q1 compared with a year ago while the cost-per-click declined 19%. The paid clicks increase beat analyst expectations of a 29.7% increase, per a report from Reuters.
Overall, revenues rose 22% for a total of $24.7 billion with advertising revenues totaling $21.4 billion, up from $18 billion during the same period a year ago.
In a conference call with analysts to discuss the results, Google CEO Sundar Pichai said mobile continues to drive momentum behind the company’s advertising business.

Dive Insight:

During the past few months, Google has found itself in the middle of a growing maelstrom as brands have become increasingly skittish about where their ads appear. A few like AT&T, PepsiCo, Wal-Mart and Johnson & Johnson have gone so far as to freeze some or all of their spend for fear of their messaging appearing next to hate speech or otherwise offensive material. A good deal of brand’s concern has been focused on YouTube.

Google appears to be taking these issues seriously by introducing new default settings around where ads can appear, more controls for advertisers and third-party brand safety reports. For now, it appears that the exit of some of brands has not hurt the company’s overall ad business.

In the call with analysts, Pichai pointed to the ongoing strength of some of YouTube’s ad formats like TrueView skippable ads and new bumper ads, which feature six-second videos. In one example Pichai discussed, Under Armour used a combination of bumper ads and TrueView to promote a product launch and experienced double the lift in product interest from those who saw both ads compared to those who only saw the TrueView ad.

Pichai also focused on Google’s growing investment in machine learning to boost its advertising business. The company’s efforts in this area includes Smart Bidding, which predicts the performance of an ad and adjusts advertisers’ bids in real time to maximize results. Smart Bidding has been embraced by retailers and app developers, according to Pichai. Universal App Campaigns also incorporate machine learning to drive results.