Home Investment Google’s Q4 Ad Rev Soars As Advertisers Return

Google’s Q4 Ad Rev Soars As Advertisers Return

SHARE:

When we last checked in with Google for its quarterly earnings in Q3, it was printing money. And in Q4, it printed some more – because advertisers are coming back. Read the release.

Google’s 2020 Q4 revenues hit $56.9 billion led by YouTube and its search business. That figure is up 23% YoY from $46.1 billion.

In total, Google’s Q4 advertising business generated $46.2 billion, up 22% YoY from $37.9 billion.

Search generated $31.9 billion in Q4 2020, up 17% YoY from $27.2 billion and YouTube brought in $6.9 billion, up 47% YoY from $4.7 billion. Fourth quarter 2020 revenue from ads served on properties owned by Google Network members generated $7.4 billion, up 23% YoY from $6 billion.

For the full 2020 fiscal year, Google Services (most of which is advertising) generated $168.6 billion, up 11% YoY from $151.8 billion.

And total Google revenue for its fiscal 2020 was $182.5 billion, up 13% YoY from $161.9 billion.

Last quarter, Google CFO Ruth Porat described “broad-based” ad spend increases. Same story this quarter?

Yup – the “broad-based” increases impacted all of Google advertising, but the earnings call provided a little more color than before. The general narrative is that after substantial advertiser pullback in the first half of 2020, brands reactivated spend in Q3 and Q4.


Which verticals contributed the most to ad spend growth?

In Q4, retail was the biggest contributor to Google’s YoY ads business growth, according to Chief Business Officer Philipp Schindler. “Tech, media, entertainment and CPG were also strong contributors,” he noted during the call.

How did YouTube do?

Direct response advertising was a big contributor to the growth, both throughout the entire year as well as in Q4, Schindler said. As with the rest of Google advertising, YouTube suffered a “substantial pullback” in ad spend at the beginning of the year. In the second half, Schindler said, marketers decided they needed to dive back in to keep their brands in front of consumers.

Subscribe

AdExchanger Daily

Get our editors’ roundup delivered to your inbox every weekday.

YouTube’s direct response growth is significant because, as Schindler said, that business was “practically nonexistent three years ago. Now it’s one of our largest and fastest-growing” areas on YouTube.

Schindler noted that 60% of customers using TrueView for Action (a YouTube ad unit sold on a cost-per-action basis) are new to YouTube. He added that Google “more than doubled” the number of TrueView for Action advertisers in the first six months of 2020.

Is YouTube finally diverting linear TV budgets? 

That’s a dream that appears yet to be realized, although Schindler said YouTube is seeing spend from brands complementing their TV buys. He reiterated the value proposition of YouTube (basically, its ability to reach people who don’t watch TV), but didn’t explicitly say that YouTube is siphoning spend from TV budgets yet.

Are AdMob and Ad Manager driving network ad revenues?

The same factors are at play with network revenues, although Schindler singled out Google’s mobile ad net AdMob and its publisher tech Ad Manager as doing particularly well in Q4.

But is this accelerated ad spend sustainable as we head out of the 2020 holiday season?

Although an analyst asked the question, Porat simply reiterated that Google was pleased with the Q4 performance. So … no answer.

How’s Google doing with its offering to retailers?

Google saw tremendous growth in the number of merchants using its platform. Retail searches in Q4 2020 grew three times compared to Q4 2019 due to the pandemic. Google’s merchant community grew 80% over the year.

Any word on how the future of privacy will impact Google?

Schindler name checked the Chrome Privacy Sandbox, which is an open standards initiative to invent new technologies to replace third-party cookies with a set of “privacy-preserving mechanisms for the web.”

“We’re making great progress,” Schindler said, pointing specifically to the Federated Learning of Cohorts (FLoC) API, which he hopes will provide a “replacement signal” for third-party cookies. (The ad industry is less convinced of that.)

“We believe the Privacy Sandbox is the best path forward and we remain committed to our collaboration with the ads community on privacy-preserving open standard mechanisms,” he said.

Must Read

clickbait

Perion Shutters Content IQ, Its Made-For-Advertising Division

Laptop fans can rest a little easier. A network of well-known MFA sites operated by Perion-owned Content IQ have been taken offline.

‘Incrementality’ Is The Buzzword That Stole Prog IO

Well, that’s a wrap on Programmatic IO Las Vegas 2024! The AdExchanger editorial hopped on stage for a live recording of The Big Story to round up all the moments that made us go “a-ha” this week, including observations on commerce media, CTV and generative AI.

Paramount And Shopsense Add Programmatic Demand To Their Shoppable Ad Network

What if the new storefront is a person sitting on their couch and scrolling their phone?

Privacy! Commerce! Connected TV! Read all about it. Subscribe to AdExchanger Newsletters

Scott’s Miracle-Gro Is Seeing Green With Retail Media

It’s lawn season – and you know what that means. Scott’s Miracle-Gro commercials, of course. Except this time, spots for Scott’s will be brought to you by The Home Depot’s retail media network.

Walled Garden Platforms Are Drowning Marketers In Self-Attributed Sales

Sales are way up; ROAS is through the roof across search, social and ecommerce. At least, that’s what the ad platforms say.

Comic: Working Hard or Hardly Working?

Shadier Than Forbes? Premium Publishers Are Partnering With Content Farms To Make A Quick Programmatic Buck

The practice involves monetizing resold subdomains jammed with recycled MFA articles produced by notorious content farms.