How the YouTube Boycott Affected Alphabet’s 2Q17
Alphabet’s (GOOGL) Google was rattled by a wave of advertiser boycotts that hit its YouTube unit earlier this year. More than 250 brands including major advertisers such as AT&T (T), Verizon (VZ), Johnson & Johnson (JNJ), and Walmart (WMT) suspended advertising on YouTube after it emerged that their ads were appearing next to inappropriate content.
The trouble began in the latter part of 1Q17, and the full impact of the boycott was expected to be felt in 2Q17. Alphabet reported 2Q17 earnings on July 24. How much damage did the YouTube boycott cause the company? It appears the impact of brands boycotting YouTube was almost negligible. Google’s search and display advertising revenue rose 20% YoY (year-over-year) to $18.4 billion. Overall, Alphabet’s revenue rose 21% YoY to $26 billion. Google is Alphabet’s largest business in terms of revenue.
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YouTube is a rising star
Besides the impact of the YouTube boycott not being noticeable in Alphabet’s top line, Alphabet executives also spoke positively about YouTube’s contribution to growth in 2Q17. Google CEO Sundar Pichai said YouTube is one of its “most promising bets” and that he sees a lot of growth ahead in the business. Alphabet CFO Ruth Porat also said that YouTube and mobile search were the “biggest contributors to growth again this quarter.”
Beefing up YouTube
As YouTube has become a vital piece in Alphabet’s growth narrative, the company has been working to beef it up with more original content to woo more users and advertisers. Original programming is also seen as Google’s attempt to ensure brand safety to prevent future advertiser boycotts.