During the past month Google executives talked about wind power, cars, Google TV and an economic indicator known as the Google Price Index, but analysts on Thursday's third-quarter earnings call really wanted to know if any have a dependable revenue stream, what's going on in its core search business and how it would capitalize on value-added services in mobile.
Jonathan Rosenberg, Google's senior vice president of product management, told those on Thursday's earnings call display advertising is on an annual run rate of $2.5 billion, and mobile is on an annualized run rate of more than $1 billion. Research firm eMarketer estimates U.S. companies will spend $743 million on mobile ads this year, up 78% from $416 million a year ago.
From Rosenberg's insight on non-core Google businesses, J.P. Morgan Analyst Imran Khan wrote in a research note that if Google is earning $2.5 billion run-rate in gross revenue on non-text display products including YouTube and DoubleClick, than he estimates YouTube generates $1.5 billion in annual revenue. That's assuming it's getting about $2 billion monetized views per week on a $15 average RPM. He also estimates in the research note that DoubleClick, other website display ads, and mobile display ads generate $1 billion in gross revenue.
Pressure continues to mount for Google to introduce new, meaningful products to provide a long-term sustainable 15% to 20% growth rate beyond 2011, Piper Jaffray Analyst Gene Munster wrote in an analyst note.
Munster estimates CPCs will rise 3% sequentially in Q4, as advertisers continue to ramp up holiday quarterly spending, especially in retail. The first and fourth quarters typically experience the strongest sequential growth quarters for Google paid clicks.
Given the strength in Q3, Munster believes Q4 sequential growth could be closer to Q3 numbers, and expects total paid clicks for Google sites to be up 4% sequentially in the fourth quarter and up 11% year on year.
Search will become the social network. I realized last year the speculation around Google launching a social platform really meant it would integrate more social features and signals in search. Not behind the scenes, but on the engine, similar to what we saw from Microsoft and Facebook this week.
I'm expecting a new industry to emerge focusing on ad targeting through social signals and features, the underlying structure of the Web. Think about the social signals that sit below what searchers see online--the content that holds together "the Web." Not only for Google, but we saw the beginnings for Microsoft this week, too.
Google, made-up primarily of engineers or those who think like one, introduces interesting options. Getting into the mind of one of those engineers doesn't necessarily reveal a method to generate revenue, but the exhilaration of solving a problem that may or may not exist. Or, solving a problem you might not know you have until the engineer points it out. Sometimes he or she can see it, but you can't.
All roads lead through search, which is this December's theme for the Search Insider Summit in Park City, Utah, Dec. 8-11. The conference offers a think-tank type of environment for top search professional. Speakers include executives from Google, Microsoft, Yahoo, Digg, Facebook and Ball State University. Come join us.
If you would like to submit an idea for a panel or participate as a speaker, please submit queries to mailto:email@example.com.