Google Earnings Rise, Place Focus On Diversification

Paid clicks rose 26% in Q3 2013 compared with the year-ago quarter and 8% sequentially, and paid-search ad prices fell 8% compared with 4%, respectively.

The paid-search advertising results released Thursday just prior to the earnings call got less play during the discussion than in previous quarters.

A variety of topics took center stage. Paid search, display advertising, and mobile will continue to stand in the foreground, but Google will look to investment in non-ad businesses, such as hardware and digital content. Enterprise software now supports business at Whirlpool, and Amtrak uses Google Maps allowing people to see trains in real-time.

Backed by Google co-founders Larry Page and Sergey Brin, research and development (R&D) investments will flourish. Some analysts voiced concerns about Google's investment in projects that may take time to roll out or those that won't likely generate profits near term.

Some investments, like the one in Calico, which focuses on health and well being, cofounded by Google, and Google Ventures managing partner Bill Maris, might seem significant, but they're not for Google, said Larry Page, Google CEO, during the earnings call.

Google reported that Q3 2013 revenue, ended Sept. 30, 2013, rose 12% to $14.89 billion compared with the year-ago quarter. Its owned sites generated $9.39 billion in revenue, or 68%, in Q3 2013, up 22% compared with the year-ago quarter. Partner sites generated $3.15 billion, or 23%, up from $3.13 billion of Google network segment revenue in the third quarter of 2012. Other revenue from was $1.23 billion, or 9% of total revenue, in the third quarter of 2013.

At the close of 2013, eMarketer expects Google to account for 32.84% of all money marketers spend on digital advertising worldwide, up from 31.46% in 2012. The data firm estimates the global digital ad market will grow 13% to $117.6 billion in 2013.

eMarketer estimates Google will take 17.4% of the U.S. display ad revenue, up from 15.3% in 2012, including banners, video, rich media and sponsors on desktops and mobile devices. Overall, marketers will increase the amount spent on display ads in the U.S. this year by 19%, reaching $17.58 billion -- up from $14.77 billion last year.

Nearly 40% of Web traffic to YouTube comes from mobile, up from 6% two years ago, Page said.

YouTube and Google sites drove the majority of video viewing in September with 165.4 million unique viewers, per comScore. Facebook ranked No. 2 with 67.2 million viewers, followed by AOL with 61.8 million, Microsoft Sites with 49.2 million and NDN with 49.1 million.

While Google sites took the top spot for views, AOL swooped in to take the No. 1 property for the most video ads watched, about 3.7 billion views compared with Google at 3.2 billion. AOL acquired Adap.tv last month giving Google YouTube TrueView a run for the money.

The Motorola Mobile segment revenue generated $1.18 billion, or 8%, compared with $1.78 billion, or 13% of consolidated revenue in the third quarter of 2012.

Analysts also believe Google also dominate the mobile ad market this year, grabbing 53.17% share, up from about 52.36% in 2012, per eMarketer. The data firm estimates the overall mobile ad market worldwide should grow 89% to $16.65 billion in 2013, up from just $8.8 billion in 2012.

2 comments about "Google Earnings Rise, Place Focus On Diversification".
Check to receive email when comments are posted.
  1. Cary McGuckin from ServiceMaster, October 18, 2013 at 9:59 a.m.

    Laurie,
    how would one reconcile this report from Google of avg CPC decrease of 8% in Q3 YoY. vs the article you wrote on the 16th that stated "The average paid search CPC on Google rose 3.5% year-on-year (YoY), but fell 1.3% quarter-on-quarter (QoQ)"
    While other 3rd party bid management platform reports also show YoY increases, i.e. "RKG saw nearly twice the increase in average cost-per-click (CPC)." according to report by Clickz republished in Search Engine Watch
    http://searchenginewatch.com/article/2300806/U.S.-Paid-Search-Spend-Continues-Rising-in-Q3-2013
    It appears the decrease in CPC's is limited only to mobile.
    We have seen significant YoY avg CPC increases (in Google) and wondering if this is, or isn't the larger trend.
    Thanks!

  2. Laurie Sullivan from lauriesullivan, October 18, 2013 at 10:15 a.m.

    Hi Cary, For starters, RKG's report only shows CPCs of its clients. I covered the same RKG report. Google has a wider view. I think mobile, for now, will continue to eat into Google's profits made from desktop clicks. Hope that helps.

Next story loading loading..