
Google Continues Slump After Ad Revenue Growth Slows - dredmorbius
https://www.bloomberg.com/news/articles/2019-04-29/alphabet-revenue-misses-analysts-estimates-shares-fall
======
sytelus
Quarterly reports are used for estimating _second order_ derivatives aka
growth of growth, which are very noisy. So friends don't let friends use
quarterly reports without smoothing :).

That aside, one thing I have never understood is why Google shutdown their
Product Search and then re-incarnated as some half-assed effort. When Google's
product search was alive and well, I often used that for comparison shopping,
finding related products etc. I'd hopped one day they would add integrated
payment, inventory and offer a viable platform for lot of retailers who have
no real IT departments to compete with Amazon. I also thought this was perhaps
much higher valued search (intent to buy!!). Instead they shut down the whole
thing. Now Amazon is the only well known comprehensive place for product
search. It looks to me Google handed over one of the most lucrative search
segment to Amazon on a silver platter and now we are seeing the result of that
decision.

~~~
threezero
Google shut down their product search because of antitrust issues. It took a
while before they realized that they were about to get into real trouble.
Hence the “half-assed” replacement.

~~~
nothis
Really? In the US? Do you have any good article on that?

~~~
oflannabhra
Not in the US. In the EU.
[https://en.wikipedia.org/wiki/European_Union_vs._Google#Goog...](https://en.wikipedia.org/wiki/European_Union_vs._Google#Google_Shopping_charges)

------
twblalock
Amazon's and Facebook's ad revenue have gone up significantly in the past
quarter, so this is not a story about the decline of the online ad business.
It is about Google not competing in that business as well as it used to.

~~~
cobookman
Amazon makes ~10B illion/year total in ad rev. Google makes ~130 Billion/year
on ads.

15% growth on 130 Billion is 19.5 Billion.

Aka Google's yearly growth is larger than all of Amazon's Ad rev.

~~~
dredmorbius
Amazon doesn't have to profit on ads. Amazon can profit on actual product
sales.

Google lacks that luxury.

~~~
YeahSureWhyNot
actually, Amazon has not profited from sales of physical products.

~~~
athenot
I still have Prime but more and more I find myself buying from other online
sources. Either because the selection is better or the price is better.

But that made me realize: Amazon's profit lies with AWS, the infrastructure
that was originally for their ecommerce operation. But their ecommerce has
forced many other retailers to streamline their operations... I wonder how
many ended up using AWS as part of that effort.

------
jypepin
It blows my mind to see a company of Google's size still having such huge
growth. Incredible really.

~~~
onion2k
Globally internet access is still growing at an incredible rate. Hundred of
millions of people are accessing the web for the first time every year. It'd
be really weird if Google wasn't seeing a lot of that growth affect their
revenue.

~~~
MarkMc
Most of the people who are accessing the web for the first time are from poor
countries like India and Indonesia, so the effect on Google's revenue is much
smaller than the number of people would suggest. Other drivers of Google's
growth are just as important: (1) People who are already connected to the
internet are getting richer and are spending more time online; (2) Google
continues to improve its algorithm matching advertisers to users

~~~
fauigerzigerk
_> Most of the people who are accessing the web for the first time are from
poor countries like India and Indonesia_

That must be why paid clicks are up 39% but cost-per-click is down -19%.

------
treis
"Continues slump" is a funny way of saying "up 20% since January".

------
xbmcuser
Google at it's value is still growing at 15% plus. I see some relation with
Google growth and the world economy at large. This year the economy has been
sluggish so are Google result.

~~~
product50
Well - why did FB revenues grew faster then?

~~~
paganel
Because FB is killing it with its Marketplace and because for a lot of people
FB has become synonymous with the Internet. I’ve become an outlier among my
circle of acquaintances because I still google the name of a specific
restaurant or coffee shop we intend to go to, while my friends go directly on
FB and search for the restaurant’s name in there (or even on IG to look at the
restaurant’s most recent stories to see what its holidays open hours are).

~~~
product50
Marketplace doesn't make money for FB yet.

Also, in US at least, people go directly to search for restaurants vs.
Facebook. Even Google is more popular for restaurant search than FB.

~~~
paganel
Hence why the google spokesperson or whatever her official position is
mentioned something about their revenues being negatively affected by currency
fluctuations, that is usually double-speak for “we did bad in foreign
markets”, which is to say that the US market is not the only market that
counts.

Also, more time spent by people on FB Marketplace (no matter if they make
money on it or not) means less time spent on Google’s web properties. I would
also look at the age demographics, Google the brand was seen as cool by me and
my age-cohort back when we were in our early 20s, so that most of us still use
it 15 years later as we approach our 40s. But I suspect that the Facebook and
especially the Instagram brand mean a lot more to people under-30 compared to
what Google means.

Google the company had seen this coming by late 2010 at least, that is that FB
(or whatever social network will become dominant) will become synonymous with
the Internet, much as Google was back then. That’s why they resorted to
desperately-sounding battle cries involving the number of arrows and the
volume of wood material in order to convince their workers that they need to
build a product that would not let FB become the only player in town.
Unfortunately their Google+ execution was poor and here they are now, looking
from the outside at a walled-garden.

~~~
granshaw
I don’t know if that double speak conclusion makes much sense. If they were
doing bad in foreign markets and the share of revenue there was negligible,
currency fluctuations would have no impact.

Actually, it’s the inverse, where currency fluctuations only start to have an
effect when you have significant foreign revenue

~~~
paganel
> Actually, it’s the inverse, where currency fluctuations only start to have
> an effect when you have significant foreign revenue

I do think Google has had a "have significant foreign revenue" for quite some
time now, otherwise they wouldn't have reached almost a $1 trillion market
valuation, it's a strange thing though that only now they've started putting
the blame on "currency fluctuations", a move which is usually made by non-cool
businesses like retailers or copper-miners (to name just a few), not by Amazon
and Google (at least not until now).

Maybe I'm just a little bit too cynical when it comes to how business is done
nowadays, but in the case of those retailers and copper-miners I just
mentioned blaming "currency fluctuations" it's just a way of not acknowledging
to their investors that "hey, we didn't do our homework in terms of execution
oversees, but let's blame it all on FX, it's not like even the central bankers
know how this currency thing even works". Like I said, maybe I'm just cynical,
but I see Google playing the same defect-the-blame game, especially as the
Google representative repeatedly refused to come with any other details about
this (presumably by the next conference call she'll be surprised to hear that
FX hedging is actually a thing that most of the time works quite well).

------
hn_throwaway_99
The bar chart in that article, where the y axis apparently starts at 14% and
change - it's really hard to think of journalists as sources of truth when
they use such blatantly deceptive graphics.

~~~
reaperducer
Reporters don't make the charts. It's the Wall Street Journal, not a blog.
There's and entire art department for that sort of thing.

Also, charts like that are very common in financial publications. The target
audience knows how to read them.

Edit: The original link was WSJ. It's since been changed to Bloomberg,
presumably because of the Journal's paywall, but the point still stands.

~~~
what_ever
So you are saying reporters don't have any say in what images appear as part
of their reports?

Also, this arts department you talk of - is still part of the reputed
publication? Or does arts mean they don't follow the basic paradigms?

~~~
reaperducer
_So you are saying reporters don 't have any say in what images appear as part
of their reports?_

I'm not saying "any" say, but in my experience working for two major newspaper
companies, it's not a given. There are other people who decide that. Again,
it's not a blog.

~~~
aikinai
So we should have lower standards for “major newspaper companies” as opposed
to blogs?

------
devy
I am surprised that no one mentions about their Waymo / Verily revenue
potentials. I genuinely believe those will have even bigger potentials than ad
sales for Alphabet.

~~~
netwanderer3
Elon Musk recently said LIDAR system was just too expensive and unnecessary as
he's betting on using Tesla's video cameras for their own automated driving. I
guess we'll have to wait and see.

~~~
Reedx
That does seem likely, considering humans don't have LIDAR...

Also Cornell University may have just proved this out:
[https://interestingengineering.com/cheap-cameras-might-be-
ju...](https://interestingengineering.com/cheap-cameras-might-be-just-as-good-
as-lidar-new-study-shows)

~~~
ddalex
humans have a brain that's difficult to reproduce in an economical fashion so
far; tech can't even saccade the current cameras to track moving objects with
clarity

------
clubm8
Maybe we've reached Peak Advertising

[http://peakads.org/images/Peak_Ads.pdf](http://peakads.org/images/Peak_Ads.pdf)

~~~
twblalock
Amazon and Facebook both announced advertising growth rates greater than 30%
this week, so no, we are not at peak advertising.

~~~
tyingq
Google has everything above the fold as an ad for any lucrative queries. They
may be at "peak ads" for search.

------
Animats
At some point, we have to hit "peak online ads". There's a point beyond which
ad vendors go down the road that killed Myspace.

~~~
dredmorbius
The shift from desktop to mobile also likely plays a role.

~~~
mochomocha
... but not in the direction you'd think. Mobile has been great for the
advertising duopoly that is Google/FB.

~~~
dredmorbius
Who gains more, relatively, though?

I ran across a recent FB stat whose overwhelming prevalance in mobile (90%+)
was staggering. Google may gain on Android, but has to lose, again,
relatively, on search.

------
netwanderer3
So I guess Google has been holding off revenue potentials from Google Maps all
these years for this moment.

------
asdfasgasdgasdg
The shares "slumped" to the price from early March. Still up 15% this year.

~~~
product50
YOu should look at how relatively google is doing vs. other tech companies or
S&P vs. individually

~~~
deathanatos
I'm not sure where the parent is getting 15%; Google seems to be up ~23% YTD.
Today's close was an all-time high, though that might get somewhat undone in
the morning.

To your point, that seems to be a bit worse than tech (~26% YTD) but better
than the S&P (17% YTD).

~~~
product50
You need to also include the 7% after market drop which Google shares saw
after declaring the results.

------
peter_retief
That makes sense to me, the ads seem to be more irritating and less appealing.
I am unlikely to include them in anything I host because the value they add is
negative

------
bartimus
Perhaps the new cookie regulations are specifically hurting Google's display
network ads. Facebook and Amazon are perhaps less affected.

~~~
luckylion
GDPR has largely been ignored on the webmaster-side, so I don't believe that's
a large factor. Especially since you can pretty much do whatever you did
before, you just need to mention it in your privacy notice.

~~~
bartimus
Perhaps. Yet anytime a user clicks "no" to cookies it means Google won't be
able to show targeted ads. But I'm purely speculating here.

~~~
luckylion
I've yet to see actual cookie consent banners on a meaningful scale. So far,
cookie notices have been rolled out, so you'll get a sentence or two and an OK
button. There's usually no option to deny, and even those that do add it,
don't do so in a way that matters: if you click No, cookies for analytics, ads
etc have already been set.

Then there's this whole topic of third party cookies. Do you only need to
inform & gather consent for cookies you set, or also those that services set
that you embed in your site?

------
duality
I wonder if Bloomberg, which also sells ad spots, is an unbiased source of
information here.

~~~
neya
It's because Bloomberg News pays reporters more if their stories move markets
[0]

[0] [https://www.businessinsider.in/Bloomberg-News-Pays-
Reporters...](https://www.businessinsider.in/Bloomberg-News-Pays-Reporters-
More-If-Their-Stories-Move-Markets/articleshow/27230622.cms)

~~~
duality
Interesting. So they're reporting on a competitor and are known to try to move
markets with their stories. Is there oversight? Since I have no legal training
I ask naively, do protections for journalism cover a situation where reporters
aim to influence and persuade (like editorials) rather than provide "just the
facts?"

~~~
empath75
Given that the newspapers at the founding of the republic were nakedly
partisan and biased and the founders were well aware of it, yes, the first
amendment protects journalists who produce biased bullshit.

You can only be prosecuted for slander and libel, and there is a high bar to
prove it.

~~~
ekianjo
How about SuperMicro? Unproven accusations go unpunished?

------
usr1987
more intrusion coming soon to sell you more useless crap!

------
Yrlec
Doesn't surprise me. The value of their ad products is deteriorating rapidly.
For instance just today we found that one of our UAC campaigns, which
supposedly is super smart and will automatically find the best channel for you
decided to switch to a new channel with 14x higher CPC than the other channel
that was working very well. That new CPC was 2x our target CPI. Why on earth
they don't put in limits to prevent stupid bids like that is beyond me.

~~~
martinald
Agreed, even on boring old paid search the new search suggestions are driving
me crazy and I can't see a way to easily turn them off?

It's changed some very niche campaigns from CPC bidding to CPA bidding and
performance dropped by about 2/3rds until I noticed and switched back. But
it's trying to auto apply CPA bidding again. Losing the will to live fighting
the endless BS Google throws at ads now.

~~~
rangerpolitic
Isn't great that exact match doesn't mean exact match? Or, isn't it great that
your ads and landing pages routinely outperform the supposed Quality Score?
Isn't it great that...

------
dredmorbius
The major shifts in Google products, with numerous high-profile cancellations,
have made me suspect weakening of fundamentals, or other threats, possibly
regulatory or legal.

This news supports (though doesn't clearly prove) the former.

~~~
twblalock
Product cancellations are just part of Google's culture. They have been doing
it for years, including at times when they had very good financial results. It
is not a sign of anything other than Google being Google.

In particular it is the result of two unusual characteristics of Google's
culture: work supporting legacy code is valued much less than it is at other
companies, and launching a new product is by far the best way to get promoted.

~~~
systemBuilder
Yes, people get promoted for launching products, but they don't get un-
promoted when the product fails 2y later, which most of them have, including
10O% of moonshots so far.

~~~
twblalock
Moonshots are supposed to be high-risk speculative projects. Failure is the
most likely outcome. You cannot expect good people to take a chance working on
moonshots if they will be punished when they fail.

