Search Engines From Google And Microsoft Reported Decline In Search Ads Revenue


As more people use the internet, the more contents the web will have.

Unfortunately for small and newer websites, their content is just a spec to the existing web. Cluttered and scattered, this is the reason why for those websites, getting visitors can be hard. And this is where search engines come in handy.

By crawling the web through links, jumping from one page to the next, search engines can seek through every corners of the web to find websites.

And two of the most prominent and well-known players in the industry, is the undisputed Google, and the runner-up Microsoft Bing.

In theory, as more content are put online and more users are also online, an increasing number of people will use search engines.

But since 'COVID-19' coronavirus pandemic, things changed. Both Google and Microsoft reported that their search engines are seeing a decline in search advertising revenue.

Google, Microsoft

Google parent-company Alphabet for example, beat expectations for its second quarter of 2020. However in its report, the company also showed that it experienced its first ever quarterly year-over-year revenue decline.

The bulk of the company’s revenue came from advertising, and Alphabet's second quarter revenue dropped by 2%.

The company’s stock barely moved after that.

CFO of Alphabet Ruth Porat said on an earnings call that consumers returned to more “commercial” search queries toward the end of the quarter, and advertisers are starting to increase their search spending, so search revenue ended the quarter about even from 2019.

As for Microsoft, the company also beat expectations, but saw a 10% year-over-year drop in search advertising revenue.

It also reported continued decrease for its guidance for the next quarter, according to its first fiscal quarter earnings.

For the December quarter, Microsoft CFO Amy Hood said that "in search excluding TAC, we expect revenue to decline in the mid to high single digit range". This suggests a decline of 7% to 9%.

Microsoft Bing can be considered among the top search engines of the web. But in comparison to Google, Bing is significantly smaller.

Google Search is a search engine much more widely used than Microsoft's Bing, but the companies have shown similar trends in search advertising revenues.

But for Google, its ad business has a network that goes way beyond its search engine. While Google's second quarter revenue declined, the decline happened on its search advertising. On YouTube however, its advertising business was doing much better.

Google second quarter revenue from search and other on-site ads (without YouTube) dropped about 10% from the year-ago quarter, down from $23.64 billion to $21.32 billion. Revenue from YouTube advertisements, which it began breaking out separately in 2020, grew from $3.6 billion to $3.81 billion.

Prior to that, Microsoft's search advertising revenue, excluding traffic acquisition costs, increased 1% in the quarter that ended March 31, which overlapped with the beginning of the pandemic.

That quarter, Alphabet reported a 9% increase in revenue from search and other (without YouTube) revenue, which jumped from $22.54 billion in 2019 to $24.50 billion in 2020.