Google’s advertising revenue rose nearly 19% in the first quarter driven largely by mobile search ads, YouTube ads and programmatic advertising, the company reported today.
That growth is reflected in paid clicks on ads across Google’s sites and advertising network rising 44% in the first quarter compared with the same period a year ago.
On Google-owned sites, such as its search engine and YouTube, the number of paid clicks rose 53% year over year and 1% respectively compared with the fourth quarter, which accounts for an outsized share of retail sales throughout the year. During Q1 Google adjusted the way it measures paid clicks and the cost per click to include additional categories of TrueView engagement ads and exclude non-engagement based trial ad formats. The change resulted in a “modest increase” in paid clicks and a “modest decrease” in the cost per click, Google says.
The average cost per click on a Google ad across all formats and venues fell 19% compared with the same period a year earlier. On Google sites alone, the cost per click fell 21% year over year, while the cost per click on Google Network Members’ websites decreased 17%.
“The biggest contributor to growth again this quarter was mobile search, reflecting the secular shift to mobile due to the greater utility of smartphones for users and advertisers, but obviously also benefiting from our focus on continuously enhancing features and functionality,” said Ruth Porat, chief financial officer of Alphabet Inc., Google’s parent company, during a conference call with analysts. She also noted that YouTube revenues grew at a “significant rate” driven primarily by video advertising.
Google is also taking advantage of consumers’ growing mobile internet usage, said Google CEO Sundar Pichai. “Mobile has transformed the shopping experience,” he said. “In the past year, local shopping queries have increased by 45%, and the number of retailers that provide us with their local inventory feeds has doubled. Our investments in innovative ad formats, include targeting and better measurement, are really helping retailers, who see us as an ally in their corner.”
Google’s strong growth has also been helped by retailers shifting a larger share of their search ad budgets to Product Listing Ads from text ads, according to a new report released this week by performance marketing agency Merkle RKG.
PLAs produced 52% of retailers’ search-ad clicks in the first quarter among Merkle clients, up from 48% in the fourth quarter. That was the first time that PLAs’ share of search ad spending topped 50%. Moreover, PLAs accounted for 75% of clicks from nonbrand Google search ads, which are searches that don’t include a brand or retailer’s name.
For the first quarter ended March 31, Alphabet reported:
- Advertising revenue of $21.411 billion, up 18.8% from $18.020 billion a year earlier.
- Google-owned sites, such as its search engine and YouTube, generated $17.403 billion in revenue, up 21.5% from $14.328 billion.
- Net income of $5.426 billion, up 29.0% from $4.207 billion.
- Google’s traffic acquisition costs, which is what Google pays to websites that host Google ads, rose to $4.629 billion, up 22.2% from $3.788 billion.