June 29, 2017
Google Parent Firm, Alphabet Inc., Posts Increased Revenue, But YouTube Ad Boycott Might Spell Trouble

Google's parent company, Alphabet Inc., might be facing an impending crisis with the currently ongoing YouTube ad boycott, but the tech giant's revenue over the past quarter appears to be completely unscathed. This Thursday, Alphabet Inc. posted a surge in profit and income over the past quarter, with the company's earnings rising 29 percent to $5.4 billion, and the tech firm's revenue surging 22 percent to a whopping $24.8 billion. After the bell rang on Thursday, Alphabet's shares rose 2.8 percent to $916.80.

BGC Partners analyst Colin Gillis stated that Alphabet's performance, while admirable on its own, is even more astounding considering the size of the company itself, according to a Reuters report. With massive platforms such as the Google Search engine, Google Maps, the Google Play Store, and YouTube, the tech behemoth has managed to keep itself balanced and well-managed.

"For a company of Google's size to post the growth that it has is just a testament to the quality and usefulness of the products they make. They are the dominant force in digital advertising."
Overall, James Wang of ARK Investment Management stated that Google's performance this past quarter is a testament to the emerging trends in the online enterprise -- a trend which favors huge companies such as Alphabet. Wang further asserted that with the current market trends in mind, smaller firms would most likely see their influence take a blow.
"It underscores a macro theme we are seeing in the internet space, which is that the bigger players are getting bigger and the smaller players are treading water or shrinking."
For Google CEO Sundar Pichai, however, Alphabet's dominant performance this past quarter is simply a testament to the success of the tech behemoth's premier services. With analysts expecting that Google would be commanding more than 61 percent of the search ad market by the end of 2017, the Google CEO appears to have an extremely valid point.
"Our great properties -- like Search, Maps, YouTube and Google Play -- are the 'prime time' for the mobile world, where people are actively engaged and interested."
As Alphabet Inc. continues to dominate, however, a storm appears to be brewing in one of the tech giant's premier services. Over the past month, YouTube has been the target of a bitter ad boycott after major advertisers noticed that their ads were being posted on videos that contained racist and hateful content. Pace University marketing professor Larry Chiagouris has stated that the ongoing YouTube ad boycott is something that might definitely hit the revenue of the streaming service in the long run, according to a report from the Bozeman Daily Chronicle.
"There is no entity in the world that is more risk-averse than a senior marketing person. They don't want to go with a media choice that presents problems for a brand, and they don't have to because they have many other choices."
Considering the sheer size of Alphabet Inc., YouTube's reduced revenues as a result of the ongoing ad boycott might not cripple the immediate financial earnings of the tech behemoth. Nevertheless, the fact that YouTube commands an audience of more than 1 billion users a month seems to suggest that one way or another, the exodus of advertisers from the video streaming giant might affect Alphabet Inc. in the long run.

Kargo CEO Harry Kargman, who runs a firm that helps manage ad campaigns on mobile devices, stated that Alphabet Inc. might very well feel the effects of the YouTube ad boycott over an extended period of time. Since YouTube's checks and balances were proven inadequate, there is a chance that advertisers would not invest as much as before on the video streaming giant, even after the ongoing ad boycott reaches its conclusion.

"It's going to be a slow burn as brands quietly shift their spending away. There are now questions about the quality of video on YouTube in the long term."
[Featured Image by Mark Lennihan/AP Images]