Google’s parent company, Alphabet Inc., held its third quarter 2023 earnings call, offering insights into how its major products and services are performing.
Specifically, the earnings call transcript reveals how Alphabet’s investments in AI and new generative search capabilities positively impact its business, with implications for marketers and advertisers.
Google Search ads remain Alphabet’s most significant revenue driver, with Search and other ad revenues up 11% year-over-year to $44 billion.
Growth was led by the retail sector, where AI-powered solutions like Performance Max optimize ad campaigns across Google properties and are helping retailers drive conversions and ROI.
For the holiday season, Google will provide retail marketers with planning tools and insights to capture seasonal shopper demand.
It will also boost the number of deals in Search to connect users with relevant promotions.
New ad formats powered by generative AI will create customized, high-quality ads for every step of the search journey.
Overall, marketers are embracing AI-powered Search ad products, with nearly 80% already using at least one.
YouTube advertising revenues grew 12% year-over-year to $8 billion, driven by brand and direct response demand. Connected TV watch time and monetization are increasing, cementing YouTube’s position as the top streaming destination.
New AI-powered creation tools and ad products are helping creators and brands succeed on YouTube.
This includes expansions to formats like Video Reach Campaigns and new ad offerings like Demand Gen Campaigns. Such innovations drive lower cost per action and more reach and views for advertisers.
The subscription business also saw substantial revenue growth, primarily reflecting subscriber gains for YouTube TV and YouTube Music Premium.
Alphabet invests heavily in generative AI across Search, cloud, and other products.
Bard, the experimental conversational interface to large language models, can now provide personalized answers by incorporating information from multiple Google services.
The Search Generative Experience (SGE) applies generative AI to enhance Search similarly. Direct user feedback has been positive, with increasing adoption as the capability rolls out to more markets.
While still early, SGE creates opportunities to serve a broader range of search needs and generate multiple high-quality perspectives.
Google also plans to test new ad formats, giving advertisers a chance to connect with customers through generative AI search features.
Alphabet’s earnings showcase a company leaning into AI-driven innovation to accelerate productivity and creativity in search and video advertising campaigns.
As Alphabet improves upon products like Bard, SGE, and Performance Max, marketers could benefit from enhanced ad personalization, creativity, and productivity.
But advertisers must also be prepared for disruption and adaptation to changes that protect user privacy and AI automation that propels changes across the digital marketing landscape.
By leveraging Google’s AI capabilities while monitoring their impact, advertisers can make the most of new ad opportunities and experiences that build brand awareness and maximize ROI.
Featured image: Rokas Tenys/Shutterstock
