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Mobile Search, YouTube Drive Alphabet’s Strong Q4 Growth

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Alphabet, Google’s parent company, has reported a total revenue of $26.1 billion, an increase of 22 percent over 2015’s $21.33 billion revenue. Its mobile search engine and YouTube have emerged as the primary drivers behind the online firm’s growth.

Last December, Google’s mobile search rounded out the sixth straight quarter it served as the main factor behind the growth, a show of Google’s continuing might in digital advertising.

“Our growth in the fourth quarter was exceptional,” said its CFO Ruth Porat in a statement, citing mobile search and YouTube as leading forces behind the impressive finish.

Online Giant Reveals Q4 Revenues

Alphabet’s earnings can be divided primarily into Google and Other Bets. The core business comprises revenue coming from advertising as well as YouTube, Android, Chrome, Maps, Google Cloud, Google Play, and a whole portfolio of hardware products.

Other Bets, on the other hand, posted $262 million in earnings compared with $150 million from the previous year, a staggering 75 percent increase. This segment includes Nest, Verily, as well as Fiber.

As Tech Times reported, there are underperforming units in Other Bets that could possibly get the axe, as Google sticks with what works and trims those that do not. Reports speculate, for instance, how the robotics division is getting pared down.

YouTube earnings also grew significantly as prompted by video advertising, with Google forecasting decent desktop and tablet advertising growth. At its third-party network sites, robust performance also steered programmatic and AdMob forward.

Google ads show no sign of slowing down, with cost-per-click, the amount being charged for ads, down 15 percent. Paid clicks, or the number of times users click the ads, climbed 36 percent.

This influx of money into digital advertising isn’t going to let up anytime soon, according to experts. Advertisers are predicted to increase their ad spend, with the U.S. digital advertising niche seen to reach almost $100 billion in yearly revenue by 2021.

As it is, traditional TV spending is fast going to digital video, and social spend isn’t too far behind.

Capitalizing On Strong Areas

Mobile search did help maintain its momentum, but earnings per share came down to $9.36 per share, which is lower than the projected $9.67 per share price.

The discrepancy is attributed to how Alphabet capitalizes on its business’ growing segments in order to offset costs for developing ones.

"I think investors will have to come to terms with the fact that the Google segment margins will contract for several more quarters because they are pursuing growth areas. YouTube is growing like weeds for them and they’re investing against that,” explained analyst Victor Anthony.

At any rate, mobile remains the likely cash cow in the years to come, becoming the number 1 destination for digital ad spending as advertisers try to close the “mobile opportunity gap,” the disconnect lying between the growing time spend on smartphones and tablets and the relatively small share allotted to those platforms.

Properly helping the growth in the digital ad landscape in the coming decade, added a Business Insider report, are factors such as artificial intelligence, augmented and virtual reality, as well as sponsored content.

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