YouTube drives Alphabet ad rebound as Q4 sales hit $56.9bn

Google parent Alphabet has surprised on the upside after sales surged to $56.9bn for the last three months of 2020 – up from $46bn the year before – on the back of a rampant YouTube and recovery in search advertising.

YouTube drives Alphabet ad rebound as Q4 sales hit $56.9bn

Google’s advertising rebound

• Alphabet has rebounded strongly from the immediate impact of Covid-19, as reflected in stonking fourth-quarter earnings that blew away even the most optimistic observers.

• Key to the internet giant’s success has been the runaway hit of YouTube among a locked-down populace, where revenues totaled $6.9bn for the year (up from $4.7bn the year previous) with revenues in the last quarter alone totaling $5bn.

• Another bright spot was search and advertising revenue, which stood at a healthy $31.bn for the year – a significant strengthening of Google’s financial position from the $27.2bn recorded just a year before.

• These twin engines of growth helped power group revenues northward towards $56.bn in the fourth quarter, a 23% premium on the year prior when the corresponding figure stood at $46.1bn.

• Lauding the figures, Alphabet head Sundar Pichai credited the TrueView ad format for more than doubling the number of advertisers present on YouTube.

• Pichai also praised YouTube’s e-commerce and educational functionality as key to a rapid rebound from the initial shock of the pandemic, which hit Google hard before it recovered ground in the third and fourth quarters.

• With viewing time on the increase, brand advertising and connected TV remaining the chief growth drivers at YouTube, complementing Google’s more mature search and display ad business.

Anything else?

• Behind the attention-grabbing heavy hitters, Google Cloud revenues weighed in at $13bn for 2020 and $3.8bn for the quarter, broadly in line with expectations.

• This masked a small but significant rise in operating losses from $1.19bn to $1.24bn but is set to become another Google golden goose as investors turn their capital to back winners in the so-called ’cloud wars’ between Alphabet, Amazon and Microsoft.

• Google’s results coincide with its first detailed roadmap for the rollout of Federated Learning of Cohorts (FLoC), a privacy focussed replacement for third-party cookies necessary for the targeted delivery and measurement of ads.

• Google’s mounting financial and digital clout is raising concern among regulators, sparking a stand-off with Australia over a proposed mandatory code of conduct that would oblige it to pay publishers for content it shares.