Google Earnings Show Booking Sites Face Ongoing Advertising Headwinds
Skift Take
Google continues to churn out strong revenue growth numbers despite its massive size. There was little direct mention of travel on Google’s earnings call, but a few metrics give us insights into likely online travel agency earnings season and the broader online travel ecosystem.
Google's substantial revenue growth -- 24 percent -- in the fourth quarter suggests that its largest travel advertisers, including the Priceline Group and Expedia Inc., continue to face pressure in their digital marketing spend and margins as their spend with Google is likely outpacing their revenue growth.
Google’s revenue growth trajectory at well over 20 percent in the fourth quarter, as disclosed Thursday, suggests that we should expect to see digital advertising remain an area of modest operating deleverage for the online travel agencies. This means that advertising spending grows faster than revenue and leads to margins decreasing.
The caveat would be if the online travel agencies have been able to improve return on investment from each ad dollar spent, then we could see revenue outpace advertising spend once again
