Five years ago, before GDPR, before TikTok was TikTok and before Google was Alphabet, Google reported Q4 2016 earnings of $26 billion.
On Tuesday, the company reported $75.3 billion in total Q4 2021 revenues.
It’s difficult to contextualize the kind of runaway growth Google has achieved. The company’s percent-growth remains in the low double digits – respectable but not abnormal. But that obscures how much bigger Google has become.
Alphabet’s net income in 2021 totaled $76 billion, up from $40.3 billion in 2020. For comparison’s sake, that means the amount of pure profit Google added to its business in the past year ($35.7 billion) is larger than Amazon’s entire ad business in 2021, which eMarketer pegs at $24.5 billion.
CEO Sundar Pichai and business chief Philipp Schindler highlighted two main categories behind Alphabet’s enduring growth during its Q4 earnings call Tuesday: Connected TV and retail and commerce.
The retail front
Google Cloud Platform adoption still lags far behind Microsoft Azure and Amazon Web Services.
But it’s added some powerhouse logos in its retail and commerce category. Schindler and Pichai namechecked big customer wins including Wayfair, Shopify, Albertson’s and Kohl’s.
And Alphabet’s goal is not just about growing the cloud unit, but interweaving its advertising and cloud offerings to make them stronger together.
For example, the strength of Google Search and YouTube advertising is strengthened by GCP’s adoption in retail.
“There’s a lot of common infrastructure,” Pichai said.
Google’s ad targeting business improves when more and more merchants list their product catalogues and supply-chain inventory feeds directly to Google and YouTube, for instance.
If YouTube creators see an earnings boost from generating direct ecommerce sales, it’s thanks in part to GCP’s strong retail footprint (which in turn is helped because many retailers won’t build cloud infrastructure on AWS).
GCP also has its own retail search offering, distinct from the core Google Search licensing business. As more and more commerce companies use Google Cloud for site search, the company sharpens its shopping-related responses. If someone’s searching for “face masks,” to take one loaded example, Google needs to understand the search nuances for cosmetics, clothing or home goods sellers.
The small screen
“Streaming in the living room has exploded,” Schindler said.
He even shared that connected TV screens are now the company’s fastest-growing devices. That’s a big change from the past decade-plus of new users coming online via mobile phones.
The big screen on the wall may be reasserting its dominance over the handy little screen you carry in a bag or pocket.
The advantages of CTV are starting to show, Schindler said. Tech platforms can recreate the scale of linear, but also allow brands to personalize ads by audience. Schindler also cited the ability to sequence ad campaigns and performance marketing features. One of the latest such improvements, Google’s “Video Action Campaigns,” was updated in October to automatically include CTV in the video mix, as CTV, like Google, charts exponential growth.
