Google is touting a “very strong quarter for ads,” with an emphasis on how shopping and retail marketing helped drive $61.2 billion in advertising revenue.
On Tuesday, Google’s parent company Alphabet announced the fourth-quarter results, with ad revenue growing 32.5% year over, beating Wall Street analyst estimates. The strength of ad sales was a sign that Google weathered supply chain issues and other economic factors that could have reduced some brands’ need to advertise.
Google executive attributed the advertising surge over the holiday period last year to a shopping spree led by marketers across YouTube and search. YouTube, in particular, has been rolling out new sales advertising products like live shopping streams, which were used by Walmart, Backcountry, Samsung and Verizon, according to Phillip Schindler, Alphabet’s chief business officer, who spoke during an earnings call on Tuesday.
“Retail was the largest contributor” to advertising growth, Schindler said, followed by finance, media and entertainment.
Google has done more to automate the advertising platform so retailers could set profiles in search results, bid on keywords, and connect to YouTube campaigns, Schindler explained. Google also ramped up investment in artificial intelligence that is helping marketers manage these campaigns. “There’s a lot that goes behind it to drive that simplicity,” Alphabet CEO Sundar Pichai said during the call.
YouTube ad sales grew 25% year over year to $8.6 billion. Schindler pointed to Warby Parker as an example of a company that is known for its strong direct-response marketing, but last quarter used YouTube videos for its first brand awareness campaign.
YouTube has launched ads that link to product catalogs and “video action ads,” through which customers make purchases. “We see more brand advertisers adding actions,” Schindler said.
Google’s retail advertising push is a sign of the importance of social shopping and ecommerce. Google competes with Amazon in areas like search as consumers shop for products online, and it competes with Instagram and TikTok in social video. Platforms are trying to connect video, live streams, and social media to sales.
YouTube also has Shorts, a short-form video product, which competes with TikTok, and executives said it will open more ecommerce opportunities, as well. Shorts launched globally last year.
Google also discussed its Privacy Sandbox initiative, a subject that is relevant to advertisers because it will alter the types of data marketers can glean from internet users on the Chrome web browser. Last week, Google announced a new test that would only provide programmatic advertisers a sampling of interests from users called “Topics.” The test, which is meant to limit the amount of personal data Google shares, will start later this month. Some advertisers are concerned the program could diminish the effectiveness of ads.
On Tuesday, Alphabet also announced a 20-1 stock split. That means investors would receive 20 shares for every one they hold, at a proportionally reduced value. Google’s share price rose 8.8% in after-hours trading on the announcement.