Google Q3 Earnings: More Growth, More Innovation, More of the Same

October 28, 2016

Digital Marketing Link Walls By Link Walls

When Google introduced Chrome years ago, many Google watchers were puzzled. Why was it creating a browser if it’s an advertising company? Google’s response was that any improvements that improve the overall experience for consumers to use the web would benefit Google (at least in the long run).

A similar dynamic is happening now. As consumers find it easier to access the web anytime, any place (via mobile), Google benefits from increased search volume. Hence, its investments in technologies such as Android and AMP and new offerings like the Pixel phone make more sense as they seek to improve the mobile web, thus driving more queries.  The result of these investments was certainly on display in Google’s most recent quarter as it reported steady growth in Q3 — fueled by growth in mobile search and video.

Some of the highlights from Google/Alphabet’s earnings release were:

  • Revenue grew to $22.5 billion for the quarter, which represented growth of 23% in constant currency
  • Net income rose 27% to $5.06 billion
  • Overall clicks increased by 33% (clicks on Google-owned sites such as Google.com and YouTube were up 42%)
  • Average CPC declined 11% (13% on Google-owned sites)

Google had a lot of product news that rolled out in Q3, including:

  • Launch of the Pixel Phone
  • Google Assistant and Home — Google’s answer to the Amazon Echo and Apple’s Siri
  • New messaging and video apps (Allo and Duo, respectively)

These additions stem from Google’s belief that the future of the web (and really computing) is based on a more integrated hardware/software model that has artificial intelligence (AI) at its core. CEO Sundar Pichai said it well: “…in our vision, computing is becoming more and more integral. It’s going to be there for users in many different contexts. And so to really think and evolve it, you need to think about software and hardware together. That’s where a lot of innovations happen.”

What this means for retailers and brands

Bringing it down a bit — the two biggest trends that we see for retailers and brands in digital advertising are the shift to more product-based advertising programs and the dominance of mobile. You can see those coming together in examples like this where a large portion of the available real estate on a phone is advertising:

Google Mobile

Clearly, the investments that Google is making in more advanced analytics and AI should not be ignored. Quarter after quarter, Google continues to prove itself as a successful, innovative tech leader with its fingers clearly on the pulse of shifting online behavior. Retailers and brands would be wise to follow its lead.  Viewing ads on a mobile phone is clearly a dominant format today, but with the rise of technologies like Google Assistant, it’s clear that advertisers will need to leverage these technologies to interact with users in an intentional, user-friendly way in the future.  

And those who aren’t optimizing for mobile today will be that much further behind tomorrow.