Alphabet sorts out its advertising soup

Alphabet Soup-001Alphabet, the outfit formally known as Google, which has somehow becomes Google’s parent has said that its efforts to push its vast advertising business toward mobile is paying off.

The company posted second quarter earnings which beat Wall Street’s expectations and put to rest lingering concerns about how the rise of mobile might impact Google which has relied on desktop search traffic to power its profits.

Alphabet said revenue grew by 21.3 percent to $21.5 billion, while earnings jumped to $4.88 billion from $3.93 billion for the comparable period a year ago.

The company’s shares rose 6.5 percent to $816 in after-hours trading on Thursday.

Google Chief Executive Officer Sundar Pichai said during a call with investors that videos were also doing well. Over the past year, Google, Facebook and Twitter have all doubled down on video, a format where advertisers are willing to pay a premium for a few seconds of users’ undivided attention.

Google has used artificial intelligence to improve video recommendations to users, driving more engagement on the site, Pichai said.

“Video is a huge component of digital content, and YouTube continues to shine,” he said. “It’s a thriving home for creators.”

Google and other tech players are hoping to siphon advertising dollars from traditional television, where advertisers will spend a projected $70.6 billion in the U.S. this year, according to market research firm eMarketer. YouTube is in a prime position to strike, with an audience of more than 1 billion users, including more 18-34 and 18-49 year-olds than any U.S. cable network.

Revenue at Alphabet’s Other Bets business rose 150 percent to $185 million, while operating losses widened to $859 million.

The division includes broadband business Google Fiber, home automation products Nest, self-driving cars and X – the research facility that works on “moon shot” ventures.

Google’s ad revenue rose 19.5 percent to $19.14 billion, while it notched a 29 percent rise in paid clicks, where advertisers pay the company only if a user clicks on the ad.

Google’s other revenue surged 33 percent, driven by gains in the cloud computing business, in which Google competes with Microsoft and Amazon to rent computer servers to other companies.