Google Q2 Revenue Up 21 Percent to $10.96 Billion

Google’s earnings reports can be fairly humdrum. Google’s business is advertiser-dependent, and the majority of those ad dollars typically flow through Google-owned sites. Same share, larger scale. Still, Madison Avenue in the second quarter upped the ante it delivered to Google by 21 percent from last year for a grand total of $10.53 billion in advertising revenue, or 96 percent of the company’s own revenue. What’s that, isn’t all Google’s revenue its own? Well, on Thursday Google reported a 35 percent jump in second-quarter revenue to $12.21 billion. That jump sounds high, right? Well Google pulled money out of thin air—by closing its acquisition of Motorola Mobility, giving it a revenue stream it didn’t have last year. The hardware company, which Google agreed to acquire last August, chipped in $1.25 billion. Minus Motorola Mobility, Google nabbed $10.96 billion in revenue, a 21 percent increase. While the Motorola acquisition and last month’s unveiling of the Nexus 7 tablet and Nexus Q media device/whatchamacallit has turned Google into a hardware company, at least in part, its revenue is still very much tied to advertising. Advertising on Google-owned sites still makes up the bulk of that revenue at $7.54 billion (up 21 percent year-over-year) versus the $2.98 billion (up 20 percent) from Google’s network sites. The total number of paid clicks rose by 42 percent from the previous year whereas the average cost-per-click fell 16 percent. But the company’s hardware push shows that Google understands how key mobile will be to its bottom line. During an earnings call with investors, svp and chief business officer Nikesh Arora said mobile advertising today recalls search advertising in 1999. Brands are still learning how to approach the space, he said. But it sounds like Google might be grappling with mobile use cases as well. Arora discussed the one million-plus advertisers that work with Google on mobile advertising and said “usually people in mobile don’t distinguish between mobile and tablet.” And when asked whether mobile search cannibalizes desktop search, Google’s svp of advertising Susan Wojcicki said nope. “We believe mobile searches are mostly incremental,” she said, with mobile activity increasing on weekends. She further explained that both phones and tablets are on-the-go devices. Well maybe not quite yet. Sara Livingston, digital marketing manager at online food ordering service Seamless, flagged a comScore stat earlier this week that showed only 7.7 percent of tablets access cellular connections and 92.3 percent stick to WiFi, which suggests that tablets are used mainly in the home or office—traditionally the desktop’s domain. The earnings call also shed some light on Google’s commerce-related initiatives. While Google Wallet didn’t come up, one analyst did ask about the company’s daily deals program Google Offers. Wojcicki didn’t get too specific other than to say “we will continue to invest in cities we are currently operating in,” conceivably through awareness programs like the product's sponsorship of free subway WiFi in New York. She didn’t say anything about expanding to new cities. She was less oblique about the company’s transition of Google Shopping to sponsored-only product listings, saying that the push will be completed around the fourth-quarter. And while the second quarter should have been a big one for YouTube in terms of monetization because of the Digital NewFronts, Arora only said that more than 1,300 clients attended YouTube’s event and that Unilever, AT&T and American Express have made commitments. He cited assertions made around the time Google acquired YouTube that the video site was “groping for an effective business model” and added the punchline, “I think we can declare we found our model.” No numbers on that model’s performance were available.

Performance Marketing

Google Q2 Revenue Up 21 Percent to $10.96 Billion

Advertisers don’t distinguish between smartphones and tablets, execs

Tim Peterson

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Tim Peterson