Alphabet’s (NASDAQ:GOOGL) Google has introduced a new AI-powered feature called “Spotlight Moments” on YouTube for advertisers. This feature utilizes Google AI to identify trending videos related to specific cultural events, enabling advertisers to display personalized ads on relevant YouTube channels. It complements Google’s existing AI-powered YouTube campaigns like Video Reach and Video View. The addition of Spotlight Moments is expected to attract advertisers, leading to increased user engagement on YouTube and, consequently, higher advertising revenues, benefiting both YouTube and Google’s advertising performance.
In the second quarter of 2023, YouTube’s advertising revenues grew by 4.4% YoY to $7.7 billion, contributing to the overall growth of Google’s advertising revenues, which increased by 3.3% YoY to $58.14 billion. These revenues account for a significant portion of total revenues. Google Services, which includes YouTube, generated 88.8% of total revenues, amounting to $66.3 billion, with a YoY growth of 5.5%. The outlook for 2023 suggests a 5.3% YoY revenue increase in the Google Services segment.
Alphabet’s efforts to incorporate generative AI into advertising have been evident in various recent initiatives. These include a conversational experience in Google Ads to streamline campaign creation, the integration of generative AI into automatically created assets for search ads, and image creation tools for advertisers in Performance Max campaigns. The introduction of generative AI into Search Generative Experience, a conversational search feature, further enhances Alphabet’s position in the global digital advertising market, which is projected to witness a CAGR of 13.1% between 2024 and 2032.
These developments are expected to give Alphabet a competitive advantage in the advertising market, where it competes with Meta Platforms (formerly Facebook). Meta Platforms has also introduced generative AI tools for advertisers, offering features like Background Generation, Image Expansion, and Text Variations to enhance productivity and personalization. While both companies are striving to capitalize on growth opportunities in the advertising space, Alphabet’s recent initiatives may continue to drive investor confidence in the stock.
Featured Image: Megapixl
Author Stephanie Bédard-Châteauneuf