Below is a roundup of last week’s notable industry news, with summaries and our opinions. First up: we’ll try to make sense of Google’s Q2 earnings…

Alphabet (🤷): Revenue was up 24% to $119.8B, beating estimates. Search revenue grew 17% and cloud revenue jumped 82% to $24.8B because of AI demand. YouTube ad revenue was up 13% to $11B, but growth is slowing due to TikTok and Netflix competition. Alphabet said it would spend $195B-$205B on AI infrastructure this year, up from $180B-$190B. Investors didn't like that. Shares fell more than 4%🔒 in after-hours trading but have since rebounded a bit.

Comcast (🤷): Revenue was down 1.2% to $29.94B, beating estimates of $29.3B. Peacock hit profitability for the first time, helped by the FIFA World Cup and NBA playoffs, driving NBCU-related revenue up nearly 23%. Broadband and cable TV remained under pressure as Comcast prepares to split NBCUniversal and Sky from broadband. Shares were roughly flat.

Havas (👍): Organic revenue was up 2.5%, driven by North America, which had 6.4% organic growth, and key wins like Farmers Insurance. The agency holding company cited its AI operating system, Converged.AI, for helping with client retention. Havas confirmed its full-year guidance of 2%-3% organic growth. Shares rose 6.6%🔒.

Omnicom (👎): Organic revenue was up 6.1% in Omnicom's core operations (the agencies it plans to keep post-merger), beating estimates. CEO John Wren said clients are consolidating their work with the agency holding company, which had big wins in Q2 like Adidas. Investors wanted more. Shares fell 1%-2% in after-hours trading. 

Opinion: Let’s put aside AI spending for a moment. If you look at revenue growth numbers, Google is crushing it. Of course, Cloud is leading the way. But ads are no slouch. Google's touting 50% more conversions from Performance Max and AI Max versus search while performing at a similar ROAS. Search revenue going up 17%, despite the “AI killing search” narrative is an incredible story. Commercial queries (e.g. “help me find a great SUV”) are still helping Google monetize search through traditional search ads; the “damage” is concentrated in informational searches, but Google never made much money off those anyway. If anything, those searches are turning into stickier AI mode experiences that help Google collect more user data and enrich paid ads elsewhere.

YouTube's 13% growth looks more modest, and this WARC data shows why: ad revenue growth has slid three years running, from 14.7% to 11.7% to a forecasted 7% this year, as TikTok and Netflix (and probably Amazon) win lower-funnel budgets YouTube still hasn't. 

Reach isn't the issue for YouTube, conversions are, which is why YouTube is leaning heavily into Shorts (which are more conducive to driving an immediate action).

Google serves as a bellwether for the ad industry, so, big picture, these results are positive. As user attention shifts to new channels (AI, CTV), the ad platforms and marketers are aware and working hard to stay ahead of it.

Now we await the remaining Q2 earnings reports.

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