Alphabet Inc (Nasdaq: GOOG, GOOGL) has announced it will be following the lead of competitor Facebook Inc ( FB) and banning all online advertisements related to cryptocurrencies. The ban has sent cryptocurrency prices tumbling across the board, but it will likely have minimal impact on Google’s booming advertising business.
Google has updated its advertising policies on its support page to include bans on “cryptocurrencies and related content,” which includes initial coin offerings, cryptocurrency exchanges, digital wallets and crytocurrency trading advisors.
[Read: Everything You Need to Know About Bitcoin and Cryptocurrency.]
“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution,” Google’s director of sustainable ads Scott Spencer said on Wednesday, according to CNBC.
Google said its new advertising policies will go into effect starting in June.
Google and Facebook, the two dominant leaders in online advertising, have both taken a stand against cryptocurrencies in an attempt to protect their users. Facebook banned cryptocurrency ads back in January.
Investors never like to hear that a company like Google is cutting off a potential revenue source, but both Google and Facebook appear to be prioritizing their brands’ reputations over advertising profits. Google reportedly removed about 3 billion ads from its platforms in 2017 for violating its content policies. Concerned investors can appreciate that Google’s reputation for quality is among its best selling points for advertising customers.
In the most recent quarter, Google parent Alphabet reported $27.2 billion in advertising revenue, which represented about 85.5 percent of the company’s total revenue. GBH Insights head of technology research Daniel Ives says cryptocurrency ad revenue is just a drop in the bucket for Google.
“We see this having a minimal impact to Google’s ad revenue as this was an incremental ad opportunity that was limited in size and scope from the Street’s perspective,” Ives says.
Ives says Google’s YouTube platform still provides the company with a unique long-term advertising growth opportunity.
“As Google further monetizes this golden advertising gem over the coming 12 to 18 months, we believe this will be a major growth catalyst that is underappreciated by investors, in our opinion, and a key driver of ad growth for 2018 and beyond,” Ives says.
[See: 7 of the Best Stocks to Buy for 2018.]
GBH Insights has a “highly attractive” rating and $1,280 price target for Alphabet stock.
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Alphabet Inc (GOOG, GOOGL) Doesn’t Need Cryptocurrency Ad Revenue originally appeared on usnews.com
