The news: Google’s parent company Alphabet posted Q2 earnings demonstrating that the vaunted internet giant isn’t immune to the problems facing the rest of the advertising world.
The results: The company delivered revenue of $69.69 billion ($56.29 billion from advertising), roughly in line with expectations, representing 13% growth year-over-year in Q2 (17.5% for the year to date). That’s a tough comparison with 62% growth last Q2—though of course, the 2021 increase was over the early months of the pandemic.
The bright side: Over the past few years, Google and Meta have monopolized the majority of digital ad spend—but recent challenges at Meta may benefit Google.
During an economic slowdown, advertisers pay closer attention to their ad investments. For that reason, high-ROI solutions like those Google offers will remain strong—at least when compared with top-of-funnel options and brand advertising. For many advertisers, Google search is one of the highest-ROI solutions in their arsenal.
About 60% of Google's overall profits come from its advertising business, which is more durable than some of its competition. Advertisers still need to spend; they just need to spend more intelligently, given waning demand and growing inventories.
While advertisers need to slash their ad spending during a recession, not all platforms will feel the effects equally.
The counterpoint: That’s not to say everything in Mountain View is coming up roses.
The big takeaway: Google is facing headwinds. Though not as strong as those facing competitors—particularly Meta—they’re strong nonetheless.
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