Google reports its first revenue fall as COVID-19 hits advertising

Mariam Cheik-Hussein
By Mariam Cheik-Hussein | 31 July 2020

Google’s parent company Alphabet has reported the first revenue decline in the company’s history, a sign of the extent of the coronavirus pandemic’s impact on the advertising market.

The tech giant reported total revenue of US$38.3 billion for the second quarter, down 2% compared to the same time last year. Net income fell to US$7 billion from US$9.9 billion.

Google Search & other took a significant hit, with revenue down to US$21.3 billion this year from US$23.6 billion last year.

However, YouTube advertising was a bright spot, growing to US$3.8 billion in the second quarter from US$3.6 billion last year. 

“We continue to navigate through a difficult global economic environment,” says Ruth Porat, chief financial officer of Alphabet and Google.

Despite its decline in overall revenue, the tech company still beat analysts’ expectations.

"Google ad revenues were down for the quarter, but all three parts of Google's ad business outperformed our expectations for Q2, including a substantial beat for search revenues (down 10%) compared to our expectations of a 17% decline,” says eMarketer principal analyst Nicole Perrin.

“We expected April to be the bottom of the digital ad market, with a return to growth in May and June, and these results suggest that acceleration was stronger than expected.”

In its first quarter results, when the pandemic first began impacting global markets, Google executives had expected a tough second quarter as the pandemic took hold.

eMarketer expects Google to generate US$93.6 billion in net digital advertising revenue this year, down 3.3%.

The drop would mean it’s the first decline in advertising revenue for Google since eMarketer began tracking it in 2008, but Google would still maintain its dominant share of the global digital ad market, at 28.1%, with Facebook following with a 22.2% share.


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