In the midst of a pandemic, Google posts record profits thanks to advertising

The pandemic has driven Google’s engine – advertising – at full speed and the emerging world of the health crisis promises to be just as favorable for the group, thanks to its ability to capitalize on consumers’ new digital habits. .

At a time when part of the world is partly frozen by the Covid-19 pandemic, advertising, Google’s real engine, has been running at full speed, with a “titanic quarter” from January to March 2021, according to experts . Thanks to its ability to capitalize on the new habits of its users, the search engine seems to ensure an equally favorable exit from the health crisis.

The online search giant achieved 55.31 billion in turnover from January to March, or 34% more than a year ago, when the emergence of the Covid-19 pandemic caused a fall the expenses of certain advertisers, notably in the travel sector, at the end of the first quarter.

“Google has had a titanic quarter”, reacted independent analyst Patrick Moorhead, as amazed as the market: the title of Alphabet, the parent company, took more than 4% during electronic exchanges after the close of the stock market. Tuesday.

On the search engine, advertising revenue rose from $ 25 billion to $ 32 billion in one year, well beyond expectations, and it grew 50% on YouTube, to $ 6 billion.

And this is just the start, says Philipp Schindler, Google’s vice president in charge of sales: “I think we are just starting to explore the commercial potential of YouTube,” he said during a conference with analysts.

In 2020, as consumers deserted physical stores, Google and Facebook accelerated the development of ad formats that make shopping easier, with buttons directly in ads or videos to redirect users to brands.

“Google makes money”

“The line between digital and physical is blurring and we are innovating on all channels” of distribution, detailed Mr. Schindler. “It’s not just online, it’s not just offline. It’s a mix. And that is our strong point, together with Search (the search engine), Maps and YouTube . “

Small and medium-sized businesses have suffered greatly from the pandemic, especially restaurants and shops. “The Covid-19 continues to dictate the functioning of SMEs”, whose leaders have the lowest morale, underlined in February the main federation of SMEs in the United States.

But according to Philipp Schindler, “the pandemic has also been a catalyst for key consumer trends, which create many opportunities for small companies”, thanks to the appetite of users to “try new brands” and their desire to “supporting local shops”.

The Californian group manages in any case to ride the wave of recovery. It is “on course to generate 130.15 billion in net advertising revenue in 2021, an increase of 25% over one year,” estimates the firm eMarketer, which attributes 28.6% of the market share to it, just ahead of Facebook.

“Fundamentally, Google makes money; the company is pretty much all about ads,” commented analyst Rob Enderle. “There is no risk of declining revenues unless regulators intervene.”

Sorrow cloud

This is apparently the only cloud on the horizon for Alphabet. The current year could indeed be marked by developments in the fight against certain practices of technological leaders, deemed anti-competitive by more and more governments, including that of Joe Biden in the United States.

Facebook and Google are already facing lawsuits from the authorities on the competition law front. Several digital platforms, such as Amazon, TripAdvisor or Yelp, complain that Google promotes its own offers in search results.

And the Judicial Committee of the House of Representatives recently approved a report which advocates splits within the Gafa (Google, Apple, Facebook and Amazon), accused of abuse of a dominant position.

Alphabet, however, is less exposed to these kinds of risks in the field of remote computing, which has exploded in favor of travel restrictions.

Google Cloud is, of course, only the third largest cloud provider in the world, with 7% of the market share at the end of 2020, far behind Amazon’s AWS (31% of spending) and Microsoft’s Azure (20%), d ‘after the research firm Canalys.

But Ruth Porat, the group’s chief financial officer, said she was “very happy with the current momentum of Google Cloud”, which garnered more than $ 4 billion in revenues in the first quarter, up from 2.8 last year. .

In all, Alphabet posted a net profit of $ 17.93 billion, almost triple that of last year.

Its profits were boosted by a gain of 4.75 billion thanks to its investments in several companies whose valuation jumped. The group has cleared itself to repurchase up to $ 50 billion in additional shares.

With AFP


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