Google, whose ad revenues had risen in every quarter of the company’s 22-year history, reported an 8-percent drop in ad sales during the second quarter, compared to a year previous.
Revenue was down about $2.6 billion for the period as major advertisers, including travel companies and consumer products makers, cut ad spending to conserve cash during the economic shutdown.
Alphabet Inc., Google’s parent company, posted ad revenues of $29.9 billion for the year’s second quarter, compared to $32.5 billion a year earlier. The softness came from the company’s traditional search function; YouTube, another Alphabet property, showed a slight gain in revenue.
The company showed a profit of $6.4 billion for the quarter, a 30-percent drop year-on-year, with its margin shrinking from 24 percent to 17.
Ad sales are returning but “it’s premature to say we are out of the woods,” said Chief Financial Officer Ruth Porat, Alphabet’s CFO.
TREND FORECAST: Advertising budgets, as we have continually reported, are among the first to be cut when businesses goes down. As the economy worsens, advertising revenues will continue to decline.
In addition, the true efficacy of online advertising is still very much in doubt. Click-throughs do not equal sales, and, as we reported over the years, big tech has artificially inflated those numbers.
In this New ABnormal, on-trend companies will seek new platforms to reach their customer base with new messages and new delivery systems.
Stay Home
Google has ordered employees working from home to continue to do so until at least next July.
The order affects almost all 200,000 full-time and contract workers at Google and Alphabet, its parent company.
The move not only reduces workers’ exposure to the COVID virus but also enables Google to move out of office spaces and slash overhead costs.
Google has become the first tech giant to formalize a year-long work-from-home initiative.
Microsoft has said workers may return to its New York City offices in October.
Twitter has said it is unsure when workers will return to their offices but, when the time comes, the number returning will be limited to 20 percent of capacity.
TREND FORECAST: As goes big tech, so goes much of the business world. As we reported since the COVID Hysteria first hit, it was big tech that told their employees to stay home and “Be Safe,” and most of the business world followed.
And, as we had forecast, with less people commuting to work, commercial real estate prices will sharply fall and business and transportation systems that once relied on large workforces going to work will economically suffer.
