Google Reports Better-Than-Seen Revenue Growth

http://online.wsj.com/articles/google-reports-22-revenue-growth-1405628219

by reflect • 12 years ago

99 70 12 years ago

online.wsj.com

rubiquity• 12 years ago

If you come to this link about Google from Google.com by searching "Google Reports 22% Revenue Growth" you can skip the pay wall.

https://www.google.ca/search?q=google+reports+22%25+revenue+...

nbody• 12 years ago

Thank you. F@$!#% paywalls

IBM4• 12 years ago

I've lost track of how many quarters in a row CPC has declined. I think it's 12 or 13 now.

Hermel• 12 years ago

Do you happen to know the reason? Are more ads being served in countries with lower prices? Or is it due to competition?

itry• 12 years ago

My guess is that the clicks are worth less these days for two reasons:

1) The ads are now displayed so prominently that everybody has to notice them. Earlier, they where less prominent and more clearly marked as ads. So there is probably a shift in demographics. Less dedicated buyers and more people who just stumble upon the ad.

2) On tablets and phones people might a) misclick more and b) surf more without the intend to buy.

CaveTech2• 12 years ago

Probably due to a lot of factors, but the biggest one is likely ad blindness - People just don't notice Ads anymore. It's especially prevalent in kids but it's probably also taking ground with adults now too.

runako• 12 years ago

Mobile has lower rates. Expansion of ads to countries with lower rates. Both increase the overall reach & revenue of Google ads, but lower CPCs.

gcb0• 12 years ago

internet ads become king when advertisers were promised fine grained targeting.

then cpc become kink when everyone realized advertising based in demographic was not generating returns for the brands, because in the internet nobody knows you are a dog.

so everyone spend all their money on cpc, because they were told that was the metric to follow. until they realized it also does not result in conversion.

then they start spending all their money on conversion, and realized they had to give away all their profit per conversion.

then they briefly guessed that going back to before cpc was good, and everyone dumped their money on ad networks and paid cents for million of impressions god knows where. turns out those impressions were all in russian warez sites and porn.

now everyone is spending all their money on viewable impression. until they realize no browser allows for a real world implementation of this, and even if they did, in the end it is exactly the same as buying the more expensive placements on impression based publishes. but this is still beginning, so we are here. everyone is dumping their money on this this week

oh and every step, after the premium bands got tired of the new thing, the publishers being stuck with it, start a race to the bottom on price.

smackfu• 12 years ago

Fancy, Google's stock box now has after hours charting.

https://www.google.com/search?q=goog

alanpca• 12 years ago

https://www.google.com/search?q=goog#nfpr=1&q=googl

jcampbell13• 12 years ago

It would be interesting to know how much removing the background color from the Adwords ads above the organic results effected profits.

I find myself clicking adwords ads frequently since the change. They practically look identical. I imagine it was a nice boost to revenue.

VikingCoder• 12 years ago

What are you talking about? Do you not see the giant, golden "Ad" next to each ad?

yabatopia• 12 years ago

It happens to me too now and then and I'm pretty sure that we're not the only ones. The Ad icon I see is far from gigantic and more blueish than gold, it's very easy not to notice you're clicking on an advertisement. Maybe15 years of using Google and relying on the first search results on top has caused some sneaky "Ad" blindness.

Sometimes I feel sorry for the advertiser when I accidentally click such sneaky text Ad, especially when the first real, natural search result is the link to the advertising company's website, just below the Ad. It feels like a devious way to rip off advertisers who would have been first anyway.

davis_m• 12 years ago

Direct link to the filing if you are interested: http://www.sec.gov/Archives/edgar/data/1288776/0001288776140...

ChuckMcM5• 12 years ago

Continued erosion of the CPC number (down 2% Q2Q, 6% y/y) so for those who haven't been following this like I have here are the last fourteen quarters:

        	Paid Clicks	Cost Per Click	Paid Distribution
   	      Q-2-Q	Y-A-Q	Q-2-Q	Y-A-Q	In $M
   2011Q1	18	4	8	-1	337
   2011Q2	18	-2	6	12	355
   2011Q3	13	28	-5	5	383
   2011Q4	17	34	-8	-8	442
   2012Q1	7	39	-6	-12	468
   2012Q2	1	42	1	-16	507
   2012Q3	6	33	-3	-15	556
   2012Q4	9	24	-2	-6	634
   2013Q1	3	20	-4	-4	680
   2013Q2	4	23	-2	-6	706
   2013Q3	8	26	-4	-8	755
   2013Q4	13	31	-2	-11	824
   2014Q1	1	26	0	-9	845
   2014Q2	2	25	-2	-6	893

Cost per click is the money that Google gets per click, it keeps going down suggesting to me that the "value" of this advertising is going down. Paid Clicks are clicks on Google ads which are up impressively but my observation is that there are a lot more of them in places than before. And lastly Google is paying nearly $900M/quarter (that is a 3.6B% annual run rate) to "buy" traffic to their properties. From that I conclude that Google's "specialness" is losing its luster, and that results from other services are "good enough". Doing this same math on Bing results and you will see that Microsoft is capturing the lion share of the value that Google is losing here. (and while Blekko is a search engine, we figured out earlier that you couldn't buy traffic against a competitor willing to spend billions a quarter) The other observation is that this realistically, this can't go on. Eventually Bing will be getting equal CPC with Google, and at that point trying to buy traffic or force the use of a particular browser that will only go to one search engine reliably, will make you less competitive than the more efficient guy down the street. I can't wait :-)

jedc• 12 years ago

But CPC erosion is more likely due to higher % of searches from mobile devices. As Google's ads team works furiously to improve mobile ads, this will likely only go up. (Except that right now growth in the sheer number of mobile ads is outpacing the growth in monetization of those ads.)

ChuckMcM5• 12 years ago

As I mentioned above, they have CPC erosion in both their AdMob numbers and their Sites numbers. This statement though I've heard a couple of times:

   > (Except that right now growth in the sheer number of
   > mobile ads is outpacing the growth in monetization 
   > of those ads.)

I don't think I understand it. I get that more and more ads are being shown (growth in sheer number) but this part I don't get (outpacing ... monetization). So Google is throwing more and more ads out there, and at some point they are going to discover how to make them more valuable to advertisers so that the advertisers will pay more for them? I get that this isn't like a commodity good which is racing toward zero margin, but I don't see mobile ads getting more valuable. I characterize what we do at Blekko as 'utility search', which is what a lot of mobile users seem to need. When they search on their mobile for a restaurant name you can give them "perfect" search results by returning, the home pages of the restaurant, a onebox with hours/phone/address, a link to a review site, and an advertisement for a coupon at that restaurant or a competitor in the same food pallete. Google gets that, its pretty much the formula they use, but it isn't special because pretty much a solid businesses database, set of navigation links, and an ad feed for restaurants is all you need to serve that up. And other people are willing to give the phone provider a bigger cut of the ad revenue.

That is why I'm having a hard time imagining a way that Google is going to pull higher CPCs here. It feels very commodity to me and that is a margin game.

As a margin game that 32% net margin which is funding free food, self driving cars, and moonshots comes under pressure.

nostrademons3• 12 years ago

I think you're seeing a Simpson's Paradox effect with those. CPC for both mobile and desktop is going up (my supposition, I don't have numbers on this). However, mobile CPCs are less than desktop CPCs, and the query mix is continuing to shift to mobile. As a result, aggregate CPC goes down.

This also explains the Bing results. Google owns mobile search, so the shift toward mobile (with its lower CPCs) disproportionately affects them. Microsoft continues to flounder in mobile, so their average CPC will be higher right until it becomes nonexistent.

Strategically, this is a good trend for Google. They're being disrupted, but they own the primary disruptor.

IBM4• 12 years ago

Android has a lot of defensive value, but if you're saying having Android makes up for a new normal with lower CPCs then Google shareholders are in for a rough ride.

opendais2• 12 years ago

Strategically, this is a good trend for Google. They're being disrupted, but they own the primary disruptor.

Only if they can maintain similar margins in the long term. If it fundamentally eats a chunk of their profit margin, I'm not seeing that as a net positive for its share price.

ChuckMcM5• 12 years ago

This is entirely possible. I will see if I can come up with ways to test that hypothesis. One puzzling bit of not well known information is that Google recently yanked their mobile ad feed from many (if not all) of their partners. One way to interpret that would be that they were trying to shore up their mobile CPC values. Really too bad they don't break out mobile and non-mobile.

applecore• 12 years ago

Side note: this is the first time I've heard Simpson's paradox explained intuitively.

judk• 12 years ago

Its only good if mobile CPC is rising to replace it and Google is hopping from the sinking ship to the rising one. Otherwise "Simpsons Paradox" is just a description of the particular nature of the death spiral

mandeepj• 12 years ago

Google owns mobile search

Google does not own mobile search. Infact it is struggling[1] big time in mobile search. People do not use google to search on mobile. Infact, they use specialised apps like yelp, priceline etc to search for what they need.

[1] http://www.nytimes.com/2013/07/19/technology/google-misses-e...

jcampbell13• 12 years ago

I heard that Bing recently rolled out a way to just import your Adwords campaign into Bing. That should help a ton, as many of us just don't have the energy to spend on Bing.

I thought Google's buying traffic are payments to Mozilla / Apple / Samsung / etc. for being the default search engine. Mozilla's payment is like $300M/year, so I can't figure out how to get to the $3.6B number. Apple may have a much better deal on iOS.

jaredmck• 12 years ago

Ask.com & AOL are large chunks of change for the "google search network" syndication partners. This is probably most of the $3B+ in traffic buying.

nostromo• 12 years ago

It also may just be that they are capturing more of the long tail.

High CPC terms, like class action lawsuit ads, have been saturated for years. Now you see ads for low margin and low cost items as well.

shostack• 12 years ago

There's obviously a lot of specifics around contribution of mobile to these numbers, and what impact has come from enhanced campaigns causing advertisers to bid on mobile even if they were not intending to.

That said, as an experienced paid search professional, lower CPCs are good for me if overall quality remains the same or improves because it lowers my acquisition costs and improves my ROI. This in turn causes me to spend more with Google.

Beyond that though is the notion that while CPCs may come down, Google has been pushing hard on the retargeting front. There has been a lot done to try to educate advertisers about the notion of multiple touch points and cross-channel attribution. With this comes paying for net more clicks since additional touch points may increase the conversion rate significantly, and thus might warrant paying for multiple clicks.

They still have a ways to go IMHO...for starters, why the heck isn't display data baked into some sort of search funnel-esque report? And why can't I see revenue associated with view-through conversions? AdWords has the data if conversion tracking is setup...

Closing the display loop and enabling advertisers to see the actual INCREMENTAL contribution of display impressions and view through conversions is critical to this IMHO.

programminggeek• 12 years ago

More clicks, less value. Seems like mobile is driving down the CPC.

sscalia• 12 years ago

"Google has become 22% better at selling its users habits and personal information to advertisers"

JetSpiegel• 12 years ago

http://tvtropes.org/pmwiki/pmwiki.php/Main/TwentyPercentMore...

skj4• 12 years ago

Starting off with an admission that I'm a Google fanboy and employee...

I hate this sentiment. It's silly. Google does not sell any information to anyone. Google just shows people targeted ads.

If you can show a way to infer personal details from the mere fact that someone is shown a particular ad (or particular huge set of ads), then publish your results so Google can figure out how to not leak that information.

duncanawoods3• 12 years ago

There is only a subtle distinction between selling an information service like targeting and selling the underlying information.

Consider, a mobile phone network that sold drone strikes on its users using the privileged information they have on their location. The precise flow of money and information is not that important to the consequence for the end user.

Google targeting is "using information about me to benefit another company for financial gain of Google". It is not silly to call this selling...

hyp0• 12 years ago

\tangent Google is commited to increasing revenue, but I loved their early idea, of showing you relevant ads that you would want to see. Similar enough to goto.com/overture's idea, of search purely for ads. You're far more likely to pay attention, to click, to buy. And it's sustainable indefinitely because net-better for the world.

Although, judging from advertising in general, it may be better for advertisers to get your attention whether you want it or not. And they are the ones who decide whether the advertising occurs.

But if another company did ad-relevance better than Google, more efficiently (cheaper) and effectively (clicks, sales), it seems that Google couldn't beat them, because the revenue at first would be lower and Google is Wall St-committed to increasing revenues. They would have to acquire the new company (if they could).

Unfortunately, ad-relevance requires data about the person, and Google is best placed for this (alongside Facebook). Despite the privacy-backlash, people increasingly live online and accept the loss of privacy. So, instead, we have startups with new ways to gather new personal data, and are acquired by Google/Facebook.

Google Reports Better-Than-Seen Revenue Growth

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