Commentary

Google's Ho-Hum Syndrome, Another Up Quarter For Internet Giant?

Google reports Q3 2011 earnings Thursday, Oct. 13, after the bell closes daily trading on Wall Street. Analysts continue to focus on the Mountain View, Calif., company's online ad business -- search, display and mobile -- along with plans for Motorola Mobility Holdings, which it announced its intent to acquire in August for an estimated $12.5 billion.

J.P. Morgan Internet Analyst Doug Anmuth believes the Internet revolves around a "handful" of key players, such as Google, Facebook, Amazon and Apple. In a recently published research note, as examples, he points to Google's acquisition of Motorola Mobility, Amazon's launch of Kindle Fire and Silk browser, and Apple's integration of Siri technology into the iPhone S.

"Google is our top pick into 3Q earnings, as we believe Street focus on the company remains skewed toward MMI rather than Google’s fundamentals," Anmuth wrote. "We believe core search is holding up well, display and mobile continue to deliver outsized growth, and we're optimistic Google will again provide run rate revenue for display and mobile, which will continue to confirm the company’s recent investments are paying off."

advertisement

advertisement

Anmuth estimates Google will reveal sequential net revenue growth in 3Q of between 5.2% and 6%.

Rimm Kaufman Group clients that are focusing more on mobile advertising want a method to prove its value to overall revenue growth for their respective companies. Considering tablets in the mobile device category, RKG sees mobile paid-search traffic shares plateau between 7% and 8%. Excluding tablets, mobile traffic shares declined among its clients. Most chose to segment mobile, treating it differently than desktop and tablet traffic.

Brands and retailers that are working through finding the best strategy will begin to realize that without a local advertising campaign mobile holds significantly less value to overall revenue growth. Google repeatedly notes that one in three mobile searches show local intent.

Overall, across RKG's client base, Google's cost per clicks rose 6% in Q3 2011, down from a 9% year-on-year sequential increase. With sales per click (SPC) rising 11%, return on advertising spend (ROAS) rose just under 5% compared with the year-ago quarter.

"Paid search seems largely immune to the overall economic picture," Rimm Kaufman Senior Analyst Mark Ballard told Search Marketing Daily.

 

From RKG's perspective, a larger contributor to Google's traffic growth points to the migration of Product Listing Ads (PLAs) from Google’s Affiliate Network to AdWords and the shift to a CPC model. While the trend began in Q3 2010, Ballard has noticed widespread adoption among RKG's clients.  In Q3, PLAs contributed a little less than 5% of the total amount spent on ads by advertisers across Google.

 

 

 

 

 

 

 

Next story loading loading..