Google's major revenue stream advertising sees a hit in Q1 2020 earnings

Due to the overall slowdown across the global economy, the tech giant Google is now witnessing downtime across verticals. But the digital transformation does have its perks and offers a fair advantage to the company.

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Google is reporting that users are turning to some products for help more than ever. This is reflected in the rise in search activity, engagement on YouTube, downloads on Google Play, and usage of G Suite.

In 2019, the parent company Alphabet reported revenues of $36.3 billion for Q1, missing analyst estimates by over a $1 billion. Not only that, its revenue growth as of last year — 17 percent year-on-year — has been the slowest since 2015.

This quarter, internet users are spending significantly more time on their Android apps, with downloads of apps from Google Play rising 30 percent between February and March. The watchtime for YouTube watchtime has also significantly increased, particularly livestreams. G Suite now has six million paying customers.

Over 100 million students and educators are using Google Classroom, two times the number from the beginning of March. There has been an increase in demand for Chromebooks, as analysis reports a 400 percent increase during the week of March 21 year-over-year. 

Thanks to remote working and education, Google Meet, the video conferencing platform is now adding roughly 3 million new users each day, and has seen a 30-fold increase in usage since January. There are now over 100 million participants meeting daily on Google Meet, says CEO Pichai.

The first two months of the quarter were strong for the search, network, and YouTube businesses. In March, Google experienced a significant and sudden slowdown in its advertising revenues, correlated to the locations and sectors impacted by the virus and related shutdown orders. 

The recovery in advertising spends from the industry is expected to be dependent on a return to economic activity. Pichai refers to two key aspects of Google's business that give the company confidence about the future.

He said, "First, as we saw after 2008, one of the strongest features of Search Ads is they are cost-effective and can be adjusted quickly, so it’s comparatively easy to turn them off and then back on. Second, our business is more diversified than it was in 2008, and we are excited about the momentum in areas like YouTube, Cloud, Google Play, and our computing efforts."

Besides, there has been significant growth across the sale of Chromebooks and G Suite, particularly in Meet and Classroom, as more businesses and schools transition to remote work and learning.

Earlier, in March this year, Sundar Pichai announced a commitment of $800 million to support small businesses and crisis response efforts through a combination of grants, small business loans, and ad credits. 

The Google News Initiative is offering financial support to thousands of small, medium and local news publishers through a Journalism Emergency Relief Fund. The company has also waived ad serving fees off, for news publishers globally on Ad Manager for the next five months.