Google-parent company Alphabet has seen its total advertising revenue decline for the first time but YouTube continues to attract investment, according to the latest company reports.

Total Alphabet advertising revenue fell 8.1% in the second quarter of 2020, down $2.6bn to $29.9bn. This is the lowest level of investment in two years.

Google Search suffered worse, dropping by 9.8% year-on-year. This is an absolute decline of $2.3bn, taking total investment in the quarter to $21.3bn. A change in consumer search terms meant advertisers that continued to invest had to introduce a different strategy.

However, the impact of the coronavirus (COVID-19) outbreak has ultimately been short-lived. Alphabet reported that Google Search advertising revenue was flat by the end of June, paving the way for a return to growth. They added that July has seen "a modest improvement".

YouTube has been a driver of growth for Alphabet in recent quarters and managed to increase by 5.8% in Q2 2020, taking the total to $3.8bn. On the platform, the company reported "substantial growth in direct response" advertising but a "continued decline in brand advertising".

Globally, WARC forecasts online video adspend to grow 5.0% this year, far ahead of a total media decline of 8.1%.

Alphabet also saw strong growth beyond advertising, with the 'Other' segment rising 26% to $5.1bn, driven by Google Play and YouTube non-advertising revenue.

Gaming has also been an area of growth for the company, reporting that Google Play app and game downloads grew by more than 35% in Q2 2020. However, this will only partially benefit advertisers – less than half of mobile game publisher revenue comes from advertising.

Alphabet will also be hoping to tap into growing e-sports interest. Although YouTube is the second most popular video platform for gaming content, Twitch is over three times larger by hours watched.

E-commerce is another area of focus for Alphabet, having allowed sellers to list their products for free on the Google Shopping tab and on Google Search. Adding new visual features to shopping ads has also given advertisers new ways to reach shoppers. While Google Search has been the focus of online shopping so far, North American and European brands are slowly realising the potential for livestream commerce, something YouTube could lead in.

WARC Data clients can access the latest data on Alphabet's performance here.

Marketing in the COVID-19 crisis

This article is part of a special WARC Snapshot focused on enabling brand marketers to re-strategise amid the unprecedented disruption caused by the novel coronavirus outbreak.

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