Google’s advertising business continues to soar thanks in large part to the company’s dominance in search, and mobile search in particular. And that strength is also helping the search giant develop deeper ties with e-commerce companies such as Carrefour SA and JD.com Inc. to help them take on Amazon.com Inc.
Google accounted for 93% of all organic search-driven visits during the second quarter, and 96% of U.S. visits driven by a mobile organic search, according to digital marketing firm Merkle’s “Merkle Digital Marketing Report Q1 2018.”
In addition to driving organic traffic to retailers’ websites, Google also drives a large share of consumers to click on paid search ads. Google reported Monday that paid clicks on ads on Google-owned properties, such as its search engine and YouTube, jumped 58% compared with the same period a year ago and 15% over the previous quarter.
The average cost per click on a Google ad on Google-owned properties fell 22% compared with the same period a year earlier.
The search giant says the number of impressions across Google-owned properties and its ad network rose 1%, and the cost per impression on those properties rose 14%.
Google’s advertising platforms are “firing on all cylinders, as we put the power of machine learning into marketers’ hands,” said Sundar Pichai, CEO of Alphabet Inc., which is Google’s parent company, during a conference call with analysts. For example, he highlighted Google’s recent launch of Responsive Search Ads that automate the process of building text ads and optimizing them in real time to show the best performing ad for each search query. He also noted how local campaigns, which are designed exclusively to drive foot traffic to local businesses, and smart campaigns are now the default for new small and midsized advertisers. “Small business owners love the simplicity and the results,” he said.
In addition to continuing to bolster its advertising business, the search giant is also developing multiple ways to develop deeper relationships with retail businesses via its Google Express service, its Google Cloud cloud computing service, in addition to advertising, Pichai said. “We are building upon these relationships, trying to have more holistic conversations across the breadth of our offerings,” he said.
In doing so, Google is eyeing a growing opportunity, said Ruth Porat, Alphabet’s chief financial officer. “Over 90% of commerce is still offline, and we do see a great opportunity for digital to play a bigger role in that and tap into our budgets, into other budgets that have traditionally been there,” she said.
For the second quarter ended June 30, Alphabet reported:
- Advertising revenue of $28.087 billion, up 23.9% from $22.672 billion a year earlier.
- Google-owned sites, such as its search engine and YouTube, generated $23.262 billion in revenue, up 26.3% from $18.425 billion.
- Net income of $3.195 billion, down 9.3% from $3.524 billion, which reflects an antitrust fine from the European Union. Without EU fines accrued in 2017 and 2018, the company’s net income would be $8.266 billion in the quarter, up 32.0% from $6.260 billion.
- Google’s traffic acquisition costs, which is what Google pays to websites that host Google ads, rose to $6.420 billion, up 26.1% from $5.091 billion.