There is increased competition from those websites which are used for purchasing products and those which are perceived to be free of potentially offensive content and this is affected the largest U.S. digital advertising platform – Alphabet Inc’s Google, according to information available from advertising buyers.

Earlier this week, its slowest quarterly revenue growth in three years was reported by Alphabet which resulted in the company stocks dropping by 7.5 percent on the very next day which wiped off a substantial amount from its market capitalization. Interestingly, Google’s ad business accounts for about 85 per cent of the total revenues of the company.

“One word: Amazon,” said Mat Baxter, global chief executive of Initiative, which is an agency that purchases advertisements and is owned by IPG Mediabrands whose clients include Amazon.

There is a rising trend among advertisers of getting more interested in investing and putting up ads in websites where people actually make a purchase of a product such as Amazon.com compared to those sites where people search for products such as Google, said Baxter in an interview recently. This, according to him, is to ensure that the advertisers remain close to the users and the moment purchase happens.

However a different perspective was presented to the case by Monica Peart, forecasting director at research firm eMarketer. “Amazon is of course a growing part of advertisers’ ad budgets and some of its growth is indeed coming at the expense of what would have gone to Google. But this is not a major impact to Google’s ad revenue growth at this time,” she said.

Peart said that the slowing of global digital ad budgets and that of international economies is reflected in the slowdown of the growth of the growth in ad revenues for Google because massive size of the company which reported revenue generation of $36.3 billion in the first quarter of the current year.

In comparison, in the same quarter, revenues from the ad business of Amazon – which is stated in a combined manner through its “advertising and other sales” segment, amounted to $2.7 billion which was less than just one tenth of the total ad sales of Google.

The efforts to prevent the spread of disturbing or adult content on the video streaming site of Google – YouTube, has also not reaped the expected results which has driven away some of the major advertisers such as AT&T Inc to take ultimate measure of deciding not to post advertisements on the platform over fears that their ads could find placed nest to offensive content.

“Some clients have made the decision to pull back a bit,” said Jon Stimmel, chief investment officer at Universal McCann, which is an ad buying agency and a unit of IPG Mediabrands, referring to YouTube. He said that alternative streaming platforms considered more brand safe, such as Hulu and Roku, have instead been chosen by such advertisers to reposition their ads.

Barry Lowenthal, chief executive of ad agency The Media Kitchen, said that YouTube must be the main reason for the revenue decline of Alphabet because of the fact that search engine marketing, or promoting websites in search results, has not become less expensive on Google. He added that more money is spent on Google by clients compared to what they spend on many other ad platforms.

(Adapted from Reuters.com)