Posted April 06, 2019 18:05:28 Google says its paid search advertising is now the largest revenue stream for the company, and it’s growing by a staggering 20 per cent a year.
But what is it all about?
Google has always prided itself on being the biggest search engine in the world, with revenues of $5.5 trillion a year for its ad revenue.
But it has also had to fight to keep up with rising competitors, and the competition is increasing as the cost of mobile search and social media is soaring.
This is the third year Google has released its annual report, and while it has a lot of interesting numbers in it, there are some big changes to the way it’s calculating revenues.
Here’s what Google’s chief financial officer, Eddy Cue, had to say about what the company is doing in this report.
“As we have previously stated, Google has always been focused on the growth of the search and ad ecosystem, and our strategy has evolved in response to these trends,” he said.
“In 2019, we added approximately $4.2 billion to the search revenue mix, and this was offset by $1.3 billion in cost reductions across the company.”
“We continued to see our overall revenues grow in 2019, with Google increasing revenues by $4 billion to $7.7 billion.”
He said Google is continuing to invest heavily in its network and services to continue to make its ad platform more powerful, and that these investments will help the company continue to grow.
“We continue to invest in the growth and efficiency of our search platform, including in areas like Google Search Engine Optimisation (SEO) and search advertising.”
He added that “as we continue to expand our search infrastructure, we will continue to build on this base of operations and continue to drive growth and innovation across the whole of our business.”
And Google’s earnings call has revealed that the company was able to add $4,000 per share to its $6.5 billion market cap.
This comes after it earned $2.7bn in 2019.
It’s an enormous jump, and Cue has confirmed that the increase was a result of Google investing heavily in “advertising optimisation”.
“As the cost to deliver ads has gone up, so too has the cost for advertisers to create the ads we need to drive clicks and revenues,” he told analysts.
“Advertisers are now paying less for ads in the US and UK, but advertisers in China and India still see a premium for their advertising, so this is a huge change.”
“As a result, we are seeing growth in global advertising revenue from China and the rest of Asia, and we expect the revenue growth to continue in 2019.”
“The advertising industry has shown that it’s a great platform to build business relationships with customers, which is why Google continues to invest billions of dollars in its advertising network.”
Our advertising network will continue expanding and becoming the backbone for advertisers around the world.
“Google has been struggling to adapt to the changing landscape, as it tries to keep pace with the rise of mobile ad networks, which are using algorithms to better target people to specific pages.
Its chief technology officer, James Damore, resigned last month after he criticised the way he was treated by the company’s leaders.
Google’s CEO, Sundar Pichai, told analysts that it was a difficult time, and said he was “shocked” that Damore had resigned.”
I am saddened by the resignation of James Damor, our CEO, and I am dismayed by the actions of our leaders,” he wrote.”
There is no place for discrimination in our workplace and I sincerely hope that he and his colleagues will learn from his experience and move forward.
“Google’s latest earnings report was released last month, and included a number of big changes, including a huge $4bn investment in research and development.
Google said it would be launching its own video-ad platform in 2019 in a move to take on Netflix.
And Cue said the company had started to roll out the new video ads to advertisers, though he added that the network was not yet ready to go live.”
The launch of this new video ad platform will be a strategic milestone for us and will help us expand our advertising reach and reach more users across the Google ecosystem,” Cue said.
He said that while the new ad network would be rolled out to all Google users, it would still be available to people who use the Google mobile app, and would only be available for certain advertisers.”
At this time, we do not have plans to launch a video ad network in the Google Play app or mobile platform,” Cue wrote.
Google has also said it plans to start rolling out ad-free video ads in 2018, and there will be ads on the search results page.”
Google ad technology has been around for decades, and will continue its presence in video ads and the results pages of our Google search results pages,” Cue added.