Key Takeaways
- Shares of Google-parent Alphabet rose after a report said the company plans to reorganize its advertising business, which accounts for about 80% of its overall revenue.
- Alphabet is leaning on artificial intelligence to generate and place ads on Google, YouTube and its other platforms.
- Generative artificial intelligence can be substantially cheaper than conventional methods for both ad creators and sellers.
Shares of Google-parent Alphabet (GOOGL) hit a 52-week high Wednesday following reports of an impending shake-up in its core advertising business.
The Information on Tuesday reported that Sean Downey, who leads Google’s ad business in North and South America, said in a department-wide meeting that the company’s 30,000-person ad sales unit would be reorganized, according to people familiar with the matter. He did not specify whether the changes would involve layoffs.
The reorganization comes as Alphabet leans on artificial intelligence to generate and place ads on Google, YouTube, and its other platforms. Alphabet generated $54.5 billion in revenue—or 80% of total revenue—from ad sales in the third quarter.
Generative artificial intelligence can be substantially cheaper than conventional methods for both ad creators and sellers. WPP, the world’s largest advertising firm, struck a deal with Nvidia in May to create an AI-enabled content development engine.
“The savings can be 10 to 20 times,” Mark Read, WPP’s chief executive, told Reuters.
Alphabet shares were up 1.6% at $138.82 with about 45 minutes left in Wednesday’s regular trading session, after rising as high as $141.70 earlier in the day, a 52-week high.