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Advertising Delivers Profit Surge For Google Parent Alphabet

Alphabet has reported a 27% surge in third-quarter profit, driven by stronger than expected mobile and video advertising.

The parent company of Google indicated net income had grown 27 per cent to US$5.06 billion, with revenue climbing 20 per cent to US$22.45 billion. The second biggest company in the world by market value has now reported seven consecutive quarters of double-digit revenue growth.

“Mobile search and video are powering our core advertising business and we’re excited about the progress of newer businesses in Google and Other Bets,” said CFO of Alphabet Ruth Porat.

Mobile advertising has dispelled the fears of investors and analysts, who did not expect Google to successfully adapt their product to a mobile audience. 95 per cent of the mobile search market is controlled by Google, according to digital marketing firm Merkle. Google’s toughest competitor is Facebook, who attributed 84 per cent of revenue to mobile advertising in the second-quarter.

The ‘Other Bets’ segment of Alphabet includes home automation producer Nest, life sciences unit Verily, and Google Fiber, which halted plans to rollout high-speed fibre internet in ten US cities earlier this week. Alphabet’s Other Bets generated US$197 million in revenue.

Clicks on Google Ads increased by 33% in the third-quarter compared to the same period last year, the highest growth since 2012. Cost-per-click fell 11 per cent, but investors are unconcerned due to the strong mobile growth.

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