Google suffered less of an advertising slowdown than expected in its latest quarter, as a surge in mobile and video pushed revenues and earnings at its parent, Alphabet Inc. ahead of expectations.
The internet company’s advertising business had been expected to decelerate after strong growth in the previous quarter, particularly since the latest results faced a tough comparison with a solid year-ago period that saw new mobile advertising formats.
The number of times users clicked on ads on Google’s own sites in the third quarter soared 42 per cent from a year before, as mobile ads boomed. Even with an 11 per cent decline in the average cost per click, the surge in volume was enough to drive gross revenue up by 20 per cent to $22.45bn.
The robust performance of Google’s mobile business this year has eased some of worries about an inevitable deceleration as it grows.
Its growth rate in the second quarter of 2016 bounced back to the highest in more than two years, prompting a rally that drove Alphabet’s share price to a new record high at the beginning of this week.
The latest period was almost as strong, with revenue growth after stripping out the effects of currency changes of 23 per cent close to the preceding quarter’s 25 per cent.
Google’s growth surge has been accompanied by a jump in costs, with higher data centre expenses and the costs of acquiring content for YouTube pushing up the company’s other cost of revenues line by 29 per cent in the latest quarter to $4.2bn.