The Interactive Advertising Bureau released its annual report yesterday on the state of the digital ad market. The numbers looked stunning for Google and Facebook, not so rosy for everyone else. The two tech giants accounted for more than three-quarters of all the growth across the industry. And that momentum showed up today in Alphabet’s first quarter earnings.
Revenue at Google, which comes from things like search ads, display ads, and advertising on YouTube videos, came in at $24.75 billion, a 22 percent jump from the same period last year. Net profit was $5.42 billion, a 29 percent gain from the first quarter of 2016. The stock price climbed to new highs on the strength of this report, trading up about 3 percent after hours.
YouTube had a rocky quarter in the press after reports surfaced about offensive video content being presented next to marketing from major brands. If there was any negative impact on Google’s business from the advertiser boycott that began in March, however, it didn’t show up in today’s earnings.
Alphabet lumps the rest of its financials into a category called “other bets.” This bucket covers moon shots like internet access beamed down by balloons, self-driving cars, and energy-producing kites. In a statement to investors, Ruth Porat, CFO of Alphabet, said, “We clearly continue to benefit from our ongoing investments in product innovation and have great momentum in our new businesses across Alphabet."
The numbers from this quarter, however, don’t back this statement up very strongly. This group collected $244 million in revenue, a 48 percent increase from the same period last year, but overall stuck Alphabet with an $855 million loss — no surprise given these are still largely R&D projects without clear business models.