Keyword 'Radiation' Pumps Revenue


Marketers allocate between 85% and 90% of their paid-search advertising budgets to Google, which continues to see an increase in query volume and slight uptick in bid rates. When the search engine reports Q1 2011 earnings, investors will find a pleasant surprise, according to a report released Sunday from Global Equities Research. But rather than search market share and stable query volume, Trip Chowdhry, managing director at the firm, suggests that incremental ad buys on the keyword "radiation" on and associated AdSense business will drive the news.

In fact, Chowdhry increased estimates, maintaining its overweight rating and 12-month to 18-month price target of $650. It's based on a PE multiple of 19x FY2011 estimates of $34.20 and on a PE multiple of 16xFY2012 estimates of $39.14, he wrote in the report.

Chowdhry writes that contacts suggest paid-search bid prices on the keyword "radiation" rose to $13 after companies began creating campaigns based on the word, driving up prices. The campaigns attempted to align with the "tons of articles and news" published on the topic after Japan's earthquake struck, causing the nuclear reactor to fail.

"Our research indicates that it is very likely that Google experienced incrementally significant uptick in business because of 'Radiation' searches and associated contextual ads accompanying the various news/articles focused on radiation," Chowdhry writes.

While the uptick in ad sales and prices from keywords such as "radiation" may lend to positive earnings in the first quarter, other factors could lead to disappointments later this year.

Chowdhry points to industry sources who believe the reorganization came two years too late, and that executive departures or reassignments in the organization come as welcome news. Some Google executives are too old-school and don't understand the meaning of "social." A few are skeptical whether the new organization can deliver after mishaps with Orkut, Open Social, Google Buzz, and Google Wave.

Industry insiders have concerns about Android. They believe Google "completely botched the Honeycomb launch" by rushing the technology. The product and developer tools are incomplete. The original equipment manufacturers building the hardware are unhappy, and consumers have little interest in the products.

Larry Page returned as Google's chief executive officer last week. The reorganization came three days after Google executive Jonathan Rosenberg resigned from the product development group. The key appointments provide insight into Page's focus. While executives in charge of individual product groups report directly to him, the move gives executives autonomy to make quick decisions.

The Los Angeles Times reported that Andy Rubin takes the helm of mobile as senior vice president; Vic Gundotra, senior vice president of social; Sundar Pichai, senior vice president of Chrome; Salar Kamangar, senior vice president of YouTube and video; Alan Eustace, senior vice president of search; and Susan Wojcicki, senior vice president of ads.

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