Google to lay out ad spending recovery

Google is set to record another marked acceleration in advertising growth when its parent Alphabet reports its latest earnings on Tuesday, thanks to a holiday shopping season dominated by ecommerce and a partial return by advertisers who were hit hardest during the pandemic.

Checks carried out by ad measurement groups such as Merkle in the US point to a continued recovery from the low point in the second quarter of last year, when Google suffered its first-ever revenue decline.

A new dependence on digital sales by retailers lay behind the recovery. The latest results are expected to cap a year of double-digit revenue growth for Alphabet, a period when the non-digital sectors of the global advertising industry were projected to shrink by 20 per cent.

The final quarter also saw companies in hard-hit sectors including travel start to advertise more actively again after a drought over the preceding six months.

The continuing rebound was expected to fuel a 14 per cent increase in Google’s advertising revenue in the final quarter. While slower than the 16 per cent advertising growth of 2019, that was still an improvement from the 10 per cent of last year’s third quarter, and the 8 per cent contraction in the second.

Overall, Alphabet is expected to report a 15 per cent increase in revenue, to $53.1bn, with earnings per share of $15.90. That compares with $15.35 the year before, when profits were buoyed by the lack of a tax charge after Alphabet resolved an unspecified tax audit. 

The latest figures are also set to lift a curtain on how much Google has been spending on its cloud computing business in an effort to catch up with Amazon and Microsoft. The company said it would reveal the investments for the first time, as part of a series of disclosures that began a year ago — a break with past practice to give investors a more detailed look at its various businesses.