I Analysed the Alphabet Q4 2022 Earnings Report, So You Don't Have To

I analysed the Alphabet Inc. Q4 2022 earnings report, so you don't have to 😀

Knowing what's going on at Google is important for anyone working in digital marketing and advertising.

Why?

Because what happens at Google, will soon happen to the whole industry.

Let's dig!

• In 2022, total revenues increasd by "only" 10% YoY.
• Q4 was particulary negative, with a growth of just 1%.
• Google Ads increased revenue by 7% in 2022.
• However, advertising revenues decreased 3.6% in Q4 YoY.

Q4 is historically the strongest quarter for online advertising, so these figures are particularly concerning.

• Ad clicks increased by 10%, while CPCs decrased by 1%.It seems there's still a growing demand for advertising, but it was harder to monetise.
• Google Cloud had the highest revenue growth among all segments, +37% YoY in 2022.
• It also increased its share of revenue from 7% to 9%.
• Meanwhile, search ads and YouTube Ads decreased their share of revenue by one percentage point each, to 58% and 10% respectively.
• Operating income was down across the board, -5% YoY in 2022, at a margin of 26%, down from 31% in 2021.
• Google Services, which include ads, Youtube subscritions, Google Play and hardware sales, was particualry impacted with a -6% in operating income for the year.
• Google Cloud was still in the red, but the loss got smaller.

What is Alphabet Inc. planning to focus on, to revamp its numbers?

1. ‍AI.
   ‍Google will become (already is?) an Ai-first company. This will unlock new revenue streams, but most importantly, will improve efficiency of existing products. Ads will deliver better ROI to customers and so generate more revenue. Cloud solutions will become smarter and integrate better in the Ai-thirsty customers' systems. Improved APIs will be instrumental to this vision.
2. Google "Other" to be pushed.
   YouTube subscriptions (YouTube Premium, Music, CTV etc) will be more in focus. Also, hardware like the Pixel phone will receive more attention.
3. YouTube content & monetisation.
   Google is the only platform where creators can create content in every format. From long-form landscape videos on YouTube, to shorts, to blog content and more. A new revenue-sharing agreement on YouTube shorts will foster higher quality content, and new ad formats will secure its monetisation.
4. Shopping.
   Google wants to establish itself at the core of consumers' shopping journeys. From Performance Max campaigns taking over Google Shopping, to new shoppable placements on YouTube, "adding value to merchants remains a top priority".
5. Efficient hiring and infrastructure management.
   The days of unlimited growth have ended, now it's the time of efficiency. Slower hiring, smaller office space and improved data centres will be key.

‍

Conclusion 🔚

We'll see a stronger focus on monetisation of existing products.

Consumers will be bothered with more ads and paywalls, while advertisers should take advantage of more ad placements.