Google may be the giant in the digital advertising world, but even it has felt the impact that the economic downturn and recession fears are having on online ads.
google reported sales figures for the third quarter that falls short of analysts’ estimates, in large part due to a sharp slowdown in the growth of its core advertising business.
In the first quarter of 2019, Google saw a mere 6% across all its advertising types. For example, its ad revenue grew just 2.5%, whereas it is normally up 43%. However, YouTube’s ad business declined nearly 2% from the same time last year.
Google’s net income was down more than 26% from the year prior and well below the $16.6 billion analysts were anticipating, coming in at $13.9 billion.
After-hours trading shares of the company fell 6% on Tuesday due to the report.
Sundar Pichai, CEO of Google, is aware of the tougher economic climate that marketers are facing in this day and age.
When Google was established, their goal was to focus on a few core products so they could create more innovative ones. Today, this is more important than ever.
With ad spending declining in Q3 of 2014, tech companies like Google reported that they’re feeling the impact. High inflation, looming recession fears and the ongoing war in Ukraine are all factors that continue to weigh on industry morale.
New features, such as Google Cloud and Search continue to blossom within Google’s growth. Sales have been on a slow but even trajectory for Google, with G Suite Earnings coming in at $2.11 billion, up from $1.29 billion a year ago and from their previous quarter’s $1.21 billion.
Google’s “Other Bets” segment, which includes its self-driving car unit Waymo, also accelerated during the quarter to $1.6 billion that was lost on average per quarter during the year before.
Google is underperforming expectations according to Jesse Cohen, an analyst at investing.com. They delivered a lackluster quarter by failing to meet the high standards they set for themselves, largely in the advertising department.
On a conference call with analysts Tuesday, Pichai outlined how the company is investing in our “biggest growth opportunities” as they plan to realign resources and allocate more money to those areas.
“In the past quarter, we’ve made changes to our organization and timelines from what we originally planned. We have shifted away from lower priority work to focus on drive top-tier growth priorities,” Pichai said. “We plan to cut back in headcount additions during Q3.”
There is a lot of uncertainty heading into the fourth quarter in terms of growth, but it will be hard for Google to compare its results to the current quarter. The company does not provide detailed financial results for the quarter.