Google’s advertising business rose 17.1% in the third quarter ended Sept. 30 compared with the previous year, the search engine’s parent company Alphabet Inc. announced Monday. That was up from 16.1% growth in the second quarter.
The growth is in line with Merkle’s “Digital Marketing Report Q3 2019,” which last week reported that U.S. advertisers’ spending on Google search ads accelerated for the first time in nearly two years. The report bases its findings on Merkle’s clients who have worked with the digital marketing vendor for at least 19 months and have not significantly changed their strategic objective or product offerings.
Merkle clients boosted their Google search ad spending 16% during the third quarter, up from 15% growth in the second quarter. While the cost-per-click growth was unchanged at 4.5% year over year, total clicks grew 11% (up from 10% in the previous quarter), thanks in part to the first growth in Google text ad spending in a year. Google benefited from a boost in Google text ads spending, which Merkle reported grew 9.5% after four straight quarters of declining spending.
Google also is benefiting from the growth in its Showcase Shopping ad format, which looks similar to Product Listing Ads but take a consumer to a Google-hosted store page. According to the Merkle report, those ads accounted for 10.0% of smartphone Shopping ad clicks during the quarter, up from 8.5% in the previous quarter.
The search giant says the number of paid clicks on Google-owned properties rose 18% year over year, and the cost per impression on those properties fell 2%.
Google’s advertising revenue growth comes at a time of change for the search engine. Google last week announced it is integrating new artificial intelligence into its search engine to help it parse long, complicated sentences rather than just strings of words. The company’s executives described the move as one of the most significant in the company’s history.
The change is the “biggest leap forward for search in the past five years,” said Sundar Pichai, Google CEO, during a conference call with analysts. He noted that the change enables Google to better “capture nuance and help understand human context.”
The search engine company also faces challenges from numerous regulators. For example, a nationwide group of states last month opened an investigation into whether Google’s advertising practices violate antitrust laws, targeting the heart of the search giant’s business.
For the third quarter ended Sept. 30, Alphabet reported:
- Advertising revenue of $33.916 billion, up 17.1% from $28.954 billion a year earlier.
- Google-owned sites, such as its search engine and YouTube, generated $28.647 billion in revenue, up 19.1% from $24.054 billion.
- Net income of $7.068 billion, down from $9.192 billion.
- Google’s traffic acquisition costs, which is what Google pays to websites that host Google ads, rose to $7.490 billion, up 13.8% from $6.582 billion.