Google and Amazon saw massive surges in advertising revenues in the final quarter of 2020 as advertisers returned after the initial pandemic shocks.
Google announced that it made $46.2 billion in the fourth quarter of last year, a 22% rise from the same quarter of the previous year, when it made $37.9 billion.
The company’s total revenues grew by 23% compared to the same quarter of 2019.
Meanwhile, Amazon made $7.9 billion in its ‘other’ revenue category, which is largely made up of its advertising wing. This is a 64% increase from the year before, the fastest growing division of the company.
This came on the back of the company’s first-ever $100-billion quarter.
As the coronavirus pandemic becomes normalised, more people are basing their lives online. As such, the tech giants have found themselves with a captive audience as people use the internet to shop, socialise and for entertainment.
YouTube helped drive Google’s profits as its revenues surged 46% to $6.9 billion. This accounted for around 15% of Google’s total ad revenues. The video streaming service saw its fastest rate of growth in three years.
According to Google CFO Ruth Porat, YouTube’s revenues increased on the back of renewed brand advertising and ongoing strength in direct response.
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Google’s advertising revenues were hit in the second quarter of 2020 as the pandemic and its economic slump reduced marketers’ taste for advertising. This resulted in an 8% drop in the company’s ad revenue compared to the year before, Google’s first ever year-on-year revenue decline.
Amazon Chief Financial Officer Brian Olsavsky noted that the increase was due to an increase in more relevant sponsored products. “We’re improving the relevancy of ads shown on the product detail pages all the time, and we’ve seen rapid adoption of video creative format for sponsored brands,” he said.
Last month, Facebook reported a similar surge in advertising revenues, growing 22% to reach $28 billion.
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Tech giants’ advertising revenues are facing a major bump in the road from changes to Apple’s app tracking policies that are due to come into effect in early spring. The plan will see its Identifier for Advertisers (IDFA), which allows apps to collect data on how Apple users utilise their phones, will change from opt-out to opt-in.
This move could potentially land tech giants that rely on advertising, such as Facebook and Google, with billion-dollar hits to their revenues, and has sent them scrambling to find workarounds.