Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      The little-known company disrupting Eskom’s monopoly

      16 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      Chief sub-editor wanted – help shape South African tech media

      16 June 2025
    • World

      Yahoo tries to make its mail service relevant again

      13 June 2025

      Qualcomm shows off new chip for AI smart glasses

      11 June 2025

      Trump tariffs to dim 2025 smartphone shipments

      4 June 2025

      Shrimp Jesus and the AI ad invasion

      4 June 2025

      Apple slams EU rules as ‘flawed and costly’ in major legal pushback

      2 June 2025
    • In-depth

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025

      South Africa unveils big state digital reform programme

      12 May 2025

      Is this the end of Google Search as we know it?

      12 May 2025
    • TCS

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025

      TCS | Sentiv, and the story behind the buyout of Altron Nexus

      3 June 2025

      TCS | Signal restored: Unpacking the Blue Label and Cell C turnaround

      28 May 2025
    • Opinion

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025

      Digital giants boost South African news media – and get blamed for it

      29 May 2025

      Solar panic? The truth about SSEG, fines and municipal rules

      14 April 2025

      Data protection must be crypto industry’s top priority

      9 April 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Broadcasting and Media » Google’s ad resurgence is just getting started

    Google’s ad resurgence is just getting started

    By Agency Staff28 April 2021
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Image: Brett Jordan/Unsplash

    Google is turning out to be one of the biggest winners of the reopening of trade following the Covid-19 pandemic. On Tuesday, the company posted first quarter sales results that were significantly higher than expected. Underlying the impressive performance were clear signs that the strength in the Internet giant’s search advertising business may be sustainable for some time to come. Its resurgence may be just getting started.

    Parent Alphabet reported first quarter revenue of US$45.6-billion excluding traffic acquisition costs, up 35% from a year earlier and exceeding the $42.6-billion Bloomberg consensus. In its earnings release, chief financial officer Ruth Porat cited broad-based growth in ad revenue, along with higher levels of online activity from consumers. Add to that the announcement of a $50-billion buyback plan and you have a recipe for a post-earnings stock pop: Alphabet shares climbed 4% in post-market trading.

    Alphabet’s outperformance is understandable given the double dose of government stimulus and wider availability of vaccines, but the nature of the company’s business model increases the chance that the strong growth trend will be durable. It comes down to the company’s virtual monopoly of the search engine advertising business. Last year, that dominant position was detrimental as it left Alphabet exposed to all areas of the economy amid the pandemic as it decimated the businesses and marketing budgets of traditional industries including travel, brick-and-mortar retail stores, restaurants and outdoor entertainment services. Now, those areas are set to rebound as daily life returns to normal — and Google’s ad revenue should benefit in the process.

    As more people get vaccinated and the economy steadily reopens, there will be several quarters where the beaten-down sectors outperform

    The shift has already begun. On Tuesday’s earnings call, Alphabet’s executives said retail was the company’s strongest area during the quarter, adding that they are seeing more travel-related searches. The transition will last awhile. As more people get vaccinated and the economy steadily reopens, there will be several quarters where the beaten-down sectors outperform.

    On top of riding the recovery, there is also room for Google to improve the profitability of its search engine business. According to Wedbush Securities, roughly 80% of searches are still not monetised with digital ads. And a Cowen survey of 52 US ad buyers found that 70% of respondents said Google Search ads offered the highest return on investment. As demand improves, Google will be in the fortunate position of being able to either increase its ad inventory or raise its pricing. Google also has less relative exposure to areas of the market that are facing growth headwinds in the second half of the year: e-commerce and mobile-app install ads. Online sales are set to slow as physical stores reopen and consumers start spending more on experiences over physical goods, while the mobile ad business will be under pressure after Monday’s release of Apple’s new privacy feature that allows users to block data-tracking by apps on their iPhones.

    Bid up

    Investors have already bid up Alphabet shares by more than 30% this year amid rising optimism over its prospects. However, the stock price may continue to do well. The market tends to give companies higher valuation multiples during periods when sales growth is accelerating. Alphabet fits the bill. Its revenue growth is expected to improve markedly this year. That’s a contrast to 2020’s pandemic winners Amazon.com and Netflix — both companies are expected to have slower growth this year.

    Of course, Alphabet still remains under antitrust and regulatory scrutiny and that’s no small thing. It was sued by both the US department of justice and dozens of state attorneys-general last year for its anticompetitive business practices and the use of exclusionary distribution agreements for its search engine. But these lawsuits will take years to sort out and we may not see any new developments for some time.

    For those investors who want to wager on a broad-based economic recovery now, there may be no better bet among the technology giants than Alphabet.  — By Tae Kim, (c) 2021 Bloomberg LP



    Alphabet Amazon Google Netflix Ruth Porat top
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleHuawei sales slump as sanctions hit smartphone business
    Next Article Microsoft may revamp bug disclosures after suspected leak

    Related Posts

    WeThinkCode secures R35-million Google.org grant to nurture AI talent

    10 June 2025

    Apple throws shade, not code, as it falls behind in AI

    10 June 2025

    How AI is rewriting the rules of software development

    4 June 2025
    Company News

    Huawei Watch Fit 4 Series: smarter sensors, sharper design, stronger performance

    13 June 2025

    Change Logic and BankservAfrica set new benchmark with PayShap roll-out

    13 June 2025

    SAPHILA 2025 – transcending with purpose, connection and AI-powered vision

    13 June 2025
    Opinion

    Beyond the box: why IT distribution depends on real partnerships

    2 June 2025

    South Africa’s next crisis? Being offline in an AI-driven world

    2 June 2025

    Digital giants boost South African news media – and get blamed for it

    29 May 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.