Google’s Q3 earnings were released today and for search, YouTube, and ads, it was a big “meh” across the board. Let’s take a look.
YouTube. YouTube earnings were down about 2% to $7.07 billion from $7.21 billion. To put that into perspective, analysts were expecting an increase of at least 3%. This is the first-ever decrease since Google began reporting
Missing the ad mark. Search ad sales grew 4% to $39.5 billion. Analysts had expected revenue of $41 billion. Google CFO Ruth Porat said that the modest growth was because of difficult comparisons to an unusually strong quarter a year earlier, a trend she said would continue in the fourth quarter.
Google also saw advertising pullbacks in the mortgage, loan, and crypto categories, says Philipp Schindler, CBO, Google.
New products and developments in Q3. In Google’s Search On event, a number of new products and features were unveiled including:
- Multisearch expansion. Multisearch lets you use your camera’s phone to search by an image, powered by Google Lens, and then add an additional text query on top of the image search. Google will then use both the image and the text query to show you visual search results.
- Search refinements. Google will present tappable words to build your query on the fly. This is a form of a query builder, by simply just tapping on words.
- Expanded visual information. Google will show you visual stories, short videos, tips, things to do and more, depending on the query.
- Search with the word Shop. In the US, when you search for the word “shop” followed by the item you’re looking for, you’ll access the visual feed of products, tools, and inventory for that product.
- Shop in 3D. To give merchants and advertisers better access to 3D visuals, Google also launched a new automated 360-degree spin feature that can be accessed by using a “handful” of static photos.
- Complex purchase buying guide. A new buying guide will share helpful insights about a category from a wide range of trusted resources.
- Personalized results. When you’re shopping on Google you can make your selections on preferred stores and brands to see more of those in the future.
View the entire list of new shopping features announced at this year’s Search On event here.
What Google said. Sundar Pichai, CEO of Alphabet and Google, said: “We’re sharpening our focus on a clear set of product and business priorities. Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long term and being responsive to the economic environment.”
Are advertisers to blame? Advertisers and companies may be pulling back budgets amid rising inflation and interest rates. In both Google’s FY22 Q3 and Microsoft’s FY23 Q1 earnings calls, leadership blamed the declines on advertisers pulling back. Microsoft CFO Amy Hood told analysts that “reductions in customer advertising spend, which also weakened later in the quarter, impacted search in advertising and LinkedIn marketing solutions.”
Total revenues. Q3 revenues were $69.1 billion, up 6% YoY.
Dig deeper. You can view the earnings report from Alphabet here.
Why we care. Q3 showed slow growth, which could be a warning to advertisers that further budget cuts and higher CPCs could be on the horizon. Google emphasized YouTube Shorts and CTV placements, so they could be hinting at what’s to come.
The holidays historically drive additional revenue for ad platforms, but with the uncertain economy, this year is anyone’s guess.
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