Google Alphabet significantly boosts advertising revenue driven by mobile search and programmatic

Google Alphabet has announced a 21% rise in revenue to $26 billion for the second quarter 2017, largely due to a strong offering that combines mobile adverts and video ads, artificial intelligence and the cloud.

Overall, advertising revenue jumped 18% to $22.7 billion, driven by a 52% increase in paid clicks. Total ad revenue minus traffic acquisition costs (TAC) was slightly lower at 16%. According to Ruth Porat, CFO of Alphabet, the strongest growth areas included mobile search and programmatic.

However, TAC may also be the reason why stocks slipped just two hours after the announcement. Indeed, as Google’s business model changes to include more mobile ad revenue partners, its costs may be increasing.

In addition, Google faced a $2.7 billion fine by the EU after a court ruled the search engine had favoured its own eCommerce results.

Despite higher costs, mobile is undeniably a strong revenue driver for the company.

In addition, YouTube now boasts around 1.5 billion visitors each month, watching an average 60 minutes of videos.

Google cloud and Play revenue increased 42% to $3.09 million during the quarter with a sizable number of new employees joining Alphabet in the area of the Cloud.

Google CEO Sundar Pichai added:

“We rolled out new machine learning features in Google Maps, YouTube, Gmail, and Google Photos. We believe we have a compelling runway here. Our revenue growth and Alphabet structure give us both the opportunity and confidence to invest in our businesses for the long-term.”

Pichai is set to join the Alphabet board according to an announcement on Monday.

The latest revenue results show that Alphabet already makes more cash from digital advertising than any other company worldwide. It is expected to bring in $73.8 billion in advertising sales in 2017 and represents 33% of the world’s total digital advertising revenue this year.