The news: Google boosted its ad revenues by 32.6% year over year to $61.24 billion in Q4 2021, per parent company Alphabet’s earnings release on Tuesday.
Key quote: Google chief business officer Philipp Schindler said in the earnings call that “retail was again, by far, the largest contributor” to ad growth, followed by finance, media and entertainment, and travel.
Why it matters: With the massive boom in online shopping over the pandemic, the retail industry’s importance in the digital ad market has rapidly increased. Retailers have always been the biggest spenders, but the sector is still expanding its share strongly.
What this means: The numbers make clear why Google and other platforms like Meta, TikTok, and Twitter have taken great pains to court the retail industry over the past few years, and why so many retailers have tacked on advertising to their websites.
On Google’s end, that meant pushing into social commerce with features like livestream shopping on YouTube, as well as improving its Google Shopping product with visual search integration and better filtering options.
Worth remembering: Google doesn’t owe all its success to new features and product improvements. Apple’s privacy changes in iOS 14.5, which rolled out in April, had only a “modest” impact on its business, per Alphabet’s Q3 earnings call. Google’s access to first-party data means its ability to track and target ads was relatively unaffected, making its platforms especially attractive to marketers who were left scrambling after iOS 14.5.
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