• Google par­ent com­pa­ny Alpha­bet report­ed $30.7 bil­lion in ad rev­enue in Q1 2019, a 15% year-over-year increase, per an announce­ment. It was the fourth con­sec­u­tive quar­ter in which ad rev­enue growth decreased amid com­pe­ti­tion for dig­i­tal ad dol­lars and few­er ad clicks go on YouTube.
  • Over­all rev­enue hit $36.3 bil­lion, led by mobile search, YouTube and Cloud — a 17% increase from Q1 2018,  Ana­lysts had fore­cast rev­enue of $37.3 bil­lion. Last mon­th’s $1.7 bil­lion fine from Euro­pean reg­u­la­tors that alleged Google abused its mar­ket pow­er in inter­net search com­pressed its prof­it mar­gin to 18% from 25% a year ear­li­er. With­out the fine, the com­pa­ny’s mar­gin was 23%.
  • While the shift in online usage to mobile devices has led Google to pay bil­lions to com­peti­tors like Apple to place ads on rival smart­phones, the search giant’s “traf­fic acqui­si­tion costs” rose only 9.1% to $6.86 bil­lion, less than the $7.26 bil­lion that ana­lysts had esti­mat­ed.


Alpha­bet’s ad rev­enue growth of 15% is dis­ap­point­ing com­pared with growth rate of rivals in the dig­i­tal ad mar­ket­place, such as Snapchat par­ent Snap (up 39%), Ama­zon (34%), Face­book (26%) and Twit­ter (18%). Social media com­pa­nies’ ad sales con­tin­ue to out­pace the broad­er ad mar­ket, which is fore­cast to rise 4.7% this year from $522 bil­lion in 2018, accord­ing to media agency Magna.

How­ev­er, mat­u­ra­tion of the dig­i­tal ad mar­ket is like­ly to mean slow­er sales growth for com­pa­nies like Alpha­bet, which has­n’t devel­oped oth­er major sources of rev­enue, such as cloud com­put­ing and smart­phones. Google’s Android mobile oper­at­ing sys­tem pow­ers most of the world’s smart­phones, but the com­pa­ny has­n’t trans­lat­ed that dom­i­nance into sig­nif­i­cant licens­ing fees. The com­pa­ny does­n’t report results for YouTube, which is a pop­u­lar plat­form among young adults and cord-cut­ters, mak­ing com­par­isons with pri­or peri­ods dif­fi­cult for mar­keters who use the plat­form for ad cam­paigns.

Alpha­bet’s com­pa­ra­bly lack­lus­ter results may be a sign that Ama­zon’s expan­sion beyond e‑commerce and into dig­i­tal adver­tis­ing is hav­ing a big­ger effect on Google than on oth­er com­pa­nies. More than half (54%) of online shop­pers look­ing for a prod­uct begin their search direct­ly on Ama­zon, com­pared with 46% in 2015, per researcher Jump­shot. That shift trans­lates into a sig­nif­i­cant lost oppor­tu­ni­ty to reach online audi­ences.

Like Face­book, Google faces greater reg­u­la­to­ry scruti­ny as con­sumers fret over data pri­va­cy and com­peti­tors bri­dle at the dom­i­nance of the dig­i­tal adver­tis­ing “duop­oly.” Face­book set aside $3 bil­lion to cov­er a fine from the Fed­er­al Trade Com­mis­sion that may reach $5 bil­lion. So far, reg­u­la­to­ry pres­sures haven’t imped­ed the rev­enue growth for Google and Face­book. Before Alpha­bet report­ed results, Google’s share of the U.S. dig­i­tal ad mar­ket was fore­cast to slide to 37.2% this year from 38.2% in 2018, while Face­book’s share was expect­ed to grow its share to 22.1% from 21.8% dur­ing that time, per eMar­keter.

Still, Google has ambi­tious plans to devel­op tech­nolo­gies that will res­o­nant with online con­sumers. Last month, the com­pa­ny unveiled its new Sta­dia video game plat­form that will let play­ers stream games from the cloud with­out the need for an expen­sive con­sole like a Microsoft Xbox or Sony Playsta­tion. As cel­lu­lar net­works expand the avail­abil­i­ty of high-speed 5G ser­vice in the next few years and boost sup­port for mobile gam­ing, Google may carve out a more sig­nif­i­cant share of the $130 bil­lion gam­ing mar­ket.