How Alphabet’s Ad Business Growth Compares with Its Competition
Alphabet’s ad sales up 18%
Alphabet’s (GOOGL) advertising revenues rose more than 18% year-over-year in 2Q17 to $25.8 billion. Facebook (FB) and Twitter (TWTR) also rely on advertising for the majority of their revenues. Facebook’s advertising sales increased 47% to $9.2 billion in 2Q17, while Twitter’s advertising sales fell 8% to $489 million.
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Fierce competition in digital ad sector
Alphabet’s Google and Facebook are the largest players in the online advertising industry in terms of revenues. Although Google and Facebook enjoy clear market leadership in the digital advertising sector, they are facing growing competition from emerging rivals.
The competition is coming not just from traditional rivals Twitter, Yelp (YELP), and Snap (SNAP) but also from e-commerce operators like Amazon (AMZN) and wireless carriers such as Verizon (VZ). These new competitors are expanding into the Internet advertising sector in search of new growth opportunities. Verizon acquired AOL and Yahoo to bolster its digital advertising competition.
Alphabet has a lot at stake
As a dominant force in Internet advertising, Google has a lot at stake amid growing industry competition. If rivals turn the tide of competition against Google, Alphabet’s other operations could suffer because Google is its main source of revenue.
In 2Q17, the Google segment’s revenue was $25.8 billion, contributing more than 99% of overall revenues in the quarter. Alphabet’s Other Bets segment revenue was $248.0 million, as shown in the chart above.