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Have some of the “FANG” companies grown so big that further growth becomes almost impossible to achieve?
The acronym, coined by investor Jim Cramer, refers to a quartet of digital giants, Facebook, Amazon, Netflix and Google. (The phrase predates Google’s name change to Alphabet.)
Earlier in January, Apple spooked investors with slow sales growth and a projection that Q1 revenues would decline year over year. Now Google’s earnings for the final quarter of 2015 are due, and the pace of growth will be closely examined.
eMarketer’s latest estimates, released in September, projected that net ad revenues at Google would reach $51.81 billion worldwide in 2015. That represents a more than 30% share of all worldwide digital ad revenues—far ahead of second-place Facebook, which garnered 9.6% of worldwide digital ad revenues last year.
At that level, Google’s ad revenue growth for the year would be 12.7%. But eMarketer projects that growth will drop below 10% in 2016 for the first time since the Great Recession, registering a 7.7% gain.
But Google's growth is really two dramatically different stories—the waning of the desktop and the rise of the mobile screen. eMarketer forecast in September that the digital giant’s net mobile internet ad revenues would be up 49.4% on a worldwide basis to reach nearly half of net revenues.
And Google has an even greater share of the worldwide mobile ad market than the digital market as a whole, taking 33.7% of global mobile internet ad revenues in 2015. Facebook is a closer rival in this case, with 17.4% of the total—still only about half of Google’s share.
In the US, eMarketer expected mobile to account for less than half of Google’s search revenues and around one-third of display earnings. On the search side, however, that equation will flip next year, as mobile search approaches 46% of Google's net US revenues. Display is also growing in importance to Google’s revenues, specifically on the mobile side.
“As Google continues to diversify its ad offerings we expect YouTube to play an increasingly important role in Alphabet’s earnings,” said eMarketer senior forecasting analyst Martín Utreras. “Additionally, mobile search revenues should continue to increase as more content within apps gets indexed by Google.”
eMarketer estimated that YouTube’s net ad revenues would reach $4.28 billion worldwide in 2015—up 40.6% year over year. The video destination’s US net ad revenues were forecast to reach $1.55 billion, for a rise of 39.0%.
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