In what was a major surprise to experts on Wall Street and in the digital marketing industry, Google parent company Alphabet beat earnings expectations. The earnings increased year-over-year not just from a top line, but also when examining individual aspects of the Google Ads network.
Google Ads Revenue Strong Than Expected
Google saw strong revenue increases, especially from Google Search Ads, when comparing Q2 of 2023 with Q2 of 2022. This comes as a surprise when just last year there was a decrease in Google Ads revenue during Q4 2022, the all important holiday shopping season.
During the report recapping the performance of Alphabet during Q4 of 2022, Google blamed macroeconomic conditions for the change in advertising revenue. This is logical in a vacuum, however; many of the same macroeconomic conditions which effected Google during Q4 of 2022 still exist today, or have become more exacerbated. Alphabet itself did not point to any particular product or service which accounted for the increase in revenue. Ruth Porat, Chief Financial Officer of Alphabet gave credit to Google’s advancements in AI and the leadership of Search for their increases in revenue.
Why is Search Revenue Increasing?
As digital marketers we can look beyond the corporate speak of Alphabet’s corporate leadership and examine why their Search revenue in particular may have increased. We know on an individual basis, when Google Ads management is done correctly, advertisers will raise their spends as they are seeing more return from their campaigns. It could be the same is true at a macro level which has lead to Alphabet’s increase in revenue across the board. One could point to the advancement of Google’s automated bidding strategies as to why advertiser spend is increasing. Over the years, automated bidding strategies have become more complex and advanced allowing advertisers to achieve even better results. There is no way to determine if this is the exact cause, but certainly could be a contributing factor.
Part of the increase in revenue could be coming due to the spam on Google Search partners network, which has resulted in hundreds of thousands of dollars in wasted ad spend. Since this spend is triggering positive results internally, revenues may be increasing due to false positive indicators. However, it is highly unlikely that these nefarious actions were able to move the needle enough to effect Google’s top line revenue. Results Guaranteed will continue to monitor the fallout from Alphabet’s earnings, but at the end of the day many marketers may be ecstatic to hear the rebound in Google Search Ads spend during Q2 2023.