- Google topped revenue expectations in Q1, with its ad business raking in $66.89 billion, in keeping with an earnings statement from parent Alphabet. However, executives warned of mild headwinds gathering on account of macroeconomic volatility.
- Search, Google’s largest ad segment, grew revenue 9.8% yr over yr to $50.7 billion, led by spending from financial services brands followed by retailers. YouTube was up 10.3% to $8.9 billion for the period, driven by demand for direct response and brand ads.
- Despite the strong begin to the yr, Google is contending with the twin threats of macroeconomic uncertainty, which could dent ad spending, and an antitrust crackdown focused on its search and ad-tech offerings.
Google’s Q1 revenue overall totaled $90.2 billion, up 12%, delivering a stronger-than-expected quarter that saw the corporate bounce back from a vacation period through which its core promoting engines experienced a rare slowdown. The momentum at the start of the yr could also be challenged as the corporate contends with potentially weaker appetites for ad spending from marketers which are embroiled in tariff chaos. Whether Google might want to break off essential elements of its business, including its Chrome web browser and precious ad-tech assets, remains an open query as well.
Digital platforms like Google and Meta have lately benefited from a surge in promoting activity from Asia-Pacific (APAC) retailers, including Temu and Shein, which have found favor with U.S. shoppers on the hunt for affordable goods. But recent evaluation has suggested that those corporations have pulled back on account of tariffs, including on channels like paid search that represent Google’s bread and butter. Analysts at MoffettNathanson consider Meta, the owner of Facebook and Instagram, stands to lose as much as $7 billion in promoting revenue this yr on account of the Trump administration’s tariffs. Meta reports its Q1 earnings on April 30.
Google executives emphasized that it is just too early to say what the true impact of the macroeconomic volatility shall be, but acknowledged that there may very well be some weakness in what was until recently a robust spending category.
“I mean, we’re obviously not proof against the macro environment, but we wouldn’t want to take a position about potential impacts beyond noting that the changes to the de minimis exemption will obviously cause slight headwind to our ads business in 2025, primarily from APAC-based retailers,” said Chief Business Officer Philipp Schindler on a call discussing the Q1 results with analysts. Schindler added that Google is well-versed in navigating periods of uncertainty.
Beyond macro aspects, Google can also be contending with a mounting variety of regulatory threats. The search giant late last week was ruled to wield an illegal monopoly on ad-tech publisher tools and ad exchanges — though not display promoting — with remedies still being sorted out. Last yr, the corporate was found to have a monopoly on the search market, with proposed remedies including a derivative of Chrome. While these changes can be disruptive, not all analysts are convinced they’d bring down the highest dog in digital promoting.
“Google’s results reinforce the view that, even within the event Google were forced to divest the business units targeted by antitrust advocates, the direct financial impact can be minimal relative to the strength of its core businesses,” said Andrew Frank, vp distinguished analyst at Gartner, in emailed comments on the earnings report. “Although the structural impacts are harder to evaluate, the performance should give Google’s business customers some reassurance regarding Google’s durability.”
Google has made other moves of late that carry weighty implications for advertisers. This week, it announced it will keep third-party cookies in Chrome moderately than create a standalone device for opting in or out of using the controversial tracking technology. The news puts a nail within the coffin of a yearslong saga that set off a mad scramble for alternatives and left many marketers in a holding pattern. Google didn’t discuss cookies or Chrome on the Q1 earnings call.
“The earnings news effectively turns the page,” said Frank of cookie deprecation.
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