- YouTube returned to growth in the second quarter, with ad revenue up about 4% year-over-year to $7.7 billion, in keeping with an earnings statement from parent company Alphabet.
- Search and other, Google’s largest segment, grew 5% YoY to achieve $42.6 billion, beating Wall Street’s expectations. The tech firm is investing heavily in generative artificial intelligence (AI) to overhaul search, including through an experimental Search Generative Experience (SGE) that executives indicated has delivered promising early results.
- Google announced it was promoting CFO Ruth Porat to president and chief investment officer, effective Sept. 1. In the newly created role, Porat will oversee investments in Google’s other bets portfolio and report on to CEO Sundar Pichai.
After a few 12 months of being a drag on Google’s performance, YouTube promoting bounced back in Q2. The platform’s gains arrived in the midst of a rocky ad market where many brands have clamped down on spending, with video typically being a pricier option. The earnings report overall showed Google in recovery mode after recently enacting a steep round of layoffs.
As in recent quarters, bets on the TikTok-like YouTube Shorts and YouTube’s connected TV (CTV) offerings were pointed to as strengths.
“[In] YouTube, we saw ongoing signs of stabilization in advertiser spending,” said Porat on a call discussing the outcomes with analysts. “We are prioritizing product deal with increasing quality consumption of video content with each Shorts and in the front room, which is translating into improved monetization.”
Shorts is a comparatively immature format and Google didn’t break out specific ad figures beyond suggesting that monetization is moving in the “right direction.” At least in terms of user engagement, the copycat product appears successful. Shorts at the moment are watched by over 2 billion logged-in YouTube users monthly, in keeping with Pichai, up from 1.5 billion a 12 months ago.
YouTube’s CTV business also continues to assemble momentum amid an uptick in cord-cutting. The addition of the NFL Sunday Ticket package, which customers could join for starting April, might further shore up the appeal of the service as more premium live sports make the jump to streaming. YouTube’s deal around Sunday Ticket will factor in massively popular creators like MrBeast.
As Google finds its business footing again, it has also landed in the hot seat. Adalytics recently released a lengthy report that indicated Google’s video ad placement practices often fell afoul of its own promised quality standards. Rather than showing up in premium environments on YouTube, many video buys would seem on low-quality sites or with the audio turned off, amongst other shortcomings, Adalytics alleges. Google has claimed Adalytics’ findings were based on faulty methodology. Still, the research has set off one other round of discourse around a scarcity of transparency in the digital promoting space, where just a couple of large corporations — including Google — stand dominant. The European Parliament began an audit of Google’s promoting following the report.
Executives weren’t questioned by investors in regards to the Adalytics scandal. One area that did receive numerous discussion was generative AI, which Google believes could reinvent its core search ecosystem. Google in Q2 began testing SGE, a ChatGPT-like interface for answering user queries in detail. The feature already runs ads in a limited capability. Pichai emphasized that user feedback has been “very positive” to date and said that, since May, Google has reduced the time it takes to generate AI “snapshots” by half.
While the scope of generative AI’s impact on ads is difficult to gauge in the meanwhile, the manager underlined the monetization opportunity for brands. Google has rushed to prioritize generative AI following Microsoft’s early lead with the technology, which has been supported by a deep partnership with ChatGPT developer OpenAI and included an overhaul of Bing, a search rival.
“Many of those latest queries are inherently industrial in nature,” said Pichai on the earnings call. “We have greater than 20 years of experience serving ads relevant to users’ industrial queries, and SGE enhances our ability to do that even higher.”
Google, Microsoft, OpenAI and Anthropic this week formed a latest industry group around responsible AI practices. The corporations, amongst others, recently met with the White House to debate shared safety and transparency measures related to the technology.
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