
Google Profits Surge on Strong Ad Demand - kartD
http://www.wsj.com/articles/google-profits-surge-on-strong-ad-demand-1469736762
======
paulpauper
Amazon, Facebook , Google - three stocks to rule the world. They cannot do any
wrong, and I don't mean that sarcastically. Buying these stocks is like
investing in the companies that are building the matrix, but it's real life.

It's just nuts..even Microsoft and Cisco in the 90's..the growth was finite,
but there is no limit to Facebook, Google and Amazon. Every quarter is a
crusher..over and over, year after year.

Just when you think their growth is 'stalled out', something new comes along.
Now it's mobile.

The small mobile screen is perfect for advertising. Adsense ads are
everywhere. Sometimes major brands try adsense alternatives but always go back
because adsense pays the most and has the most advertisers.

~~~
akavi
> in the 90's..the growth was finite, but there is no limit to Facebook,
> Google and Amazon.

"This time, it's different."

~~~
MicroBerto
Reminds me of the phrase,

 _" When your barber starts giving you stock tips, it's time to sell"_

~~~
RileyKyeden
What if the barber is the one who said this?

~~~
mannykannot
Russell's lesser-known paradox.

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seibelj
Mobile app ads keep paying more and more. I'm regularly getting $1 per click,
and sometimes as high as $5 (finance category). I can't remember ever getting
this much for websites. I'm using google admob

~~~
mpg33
What? That's seems absurdly high..

~~~
imaginenore
It's not.

"Insurance", "loans", "mortgage" are all $44+ per click.

Some very specialized one like "mesothelioma suit" are $800+. Even
misspellings like "mesotheliama" are $600+.

~~~
pcurve
[https://www.adgooroo.com/resources/blog/the-most-
expensive-k...](https://www.adgooroo.com/resources/blog/the-most-expensive-
keywords-in-paid-search-by-cost-per-click-and-ad-spend/)

[https://searchenginewatch.com/2016/05/31/the-most-
expensive-...](https://searchenginewatch.com/2016/05/31/the-most-
expensive-100-google-adwords-keywords-in-the-us/)

mesothelioma cases must be quite lucrative for them to spend this kind of
money.

This is the one of the saddest data table I've seen in awhile.

------
pseudometa
Sometimes I click ads just to give money to Google.

~~~
cpeterso
Sometimes I click ads just to make advertisers pay.

~~~
soared
Sometimes you both help pay my salary.

------
mannykannot
Does internet advertising work, or is it possible that companies are buying
more in desperation? If the latter, it will peak just before it crashes.

~~~
angry-hacker
Majority of people pay for ads if they earn more doing so. The cost of ads
tells us it works for a lot of people and companies.

Maybe big brands pay over, or pay for just to be everywhere, but I wouldn't
call it desperation.

Yes, Internet advertising works surprisingly well.

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vasaulys
Its so bizarre to me. You'd think there would be a finite appetite for
advertising, but apparently not.

~~~
ariwilson
There can be both a finite appetite for advertising and increasing Google
revenue as long as Google is either making advertising more effective
(expanding the market), taking revenue from other publishers (controlling the
market), or making money outside of advertising.

Some random stats I found estimate that advertising is currently a $500B
yearly industry, which means Google is only 15% of the industry.

~~~
em500
Right, I found estimates of $600B yearly ad spend. To put that into context,
total annual spending (aka world GDP) is over $70T, meaning that less that 1%
of all spending in the world is on advertising.

~~~
adventured
And you can probably slap another one or two dozen trillion dollars onto that
surface GDP figure. The underground / black market economy is very, very
substantial.

------
asakurasol
PokemonGo just got a callout in the earnings call.

~~~
lucb1e
I don't understand your comment. It got a "callout in the earnings call", what
does that mean? Does the "earnings call" refer to a part of the article I
can't read (paywall) or are you making an assumption about this being because
of PokemonGo and Google/Alphabet internally mentioning PokemonGo in a
conference call?

~~~
jvolkman
Alphabet 2016 Q2 Earnings Call:
[https://www.youtube.com/watch?v=EVpWjo023cE](https://www.youtube.com/watch?v=EVpWjo023cE)

~~~
lucb1e
Another comment linked the Wikipedia, I understand now. Thanks for responding!

------
Fiahil
Ah. Yes. "Thank you" for enriching so much my life.

[http://imgur.com/MpO82Ta](http://imgur.com/MpO82Ta)

~~~
advisedwang
I don't think those are actually Google ads. I went to techcrunch and clicked
on the AdChoices icon and they all popped up non-google info.

~~~
kyrra
Yup. Looks like I got linked to adinfo.aol.com on both mobile and desktop. The
AdChoices icon is common across many platforms (it's from the Digital
Advertising Alliance), their list of members is pretty huge[0].

[0]
[http://www.aboutads.info/participating](http://www.aboutads.info/participating)

------
rebelidealist
Serious question: How does Google's ad revenue increase when Google themselves
were saying people aren't clicking on adwords as much when searching in
mobile? Also when people are using voice search such as Siri or Google Now,
they are not even seeing the ad results.

~~~
shostack
AdWords has been making several big pushes over the last few years that
contribute to this.

Among them:

\- Pushing advertisers to advertise higher up in the funnel with additional
clicks. Things like the push for "ZMOT" (Zero Moment of Truth) and such focus
on the branding side of things before people are ready to convert. Google has
long had advertisers focus primarily on last click conversions which does not
play nicely with tracking for brand efforts.

\- Video ad pushes by reps have been pretty big. Video CPMs are much higher
than static display images, and that is also why you see every publisher under
the sun having a a video for every article that autoplays even if it is a
useless annoying video. And why they are looking into auto-generated videos.

\- Turning previously free resources into paid plays (Google Product Search)

My gut right now in terms of their future monetization is the continued
transition of Gmail from a "regular" mail platform into an algorithmic feed
where advertisers have to pay a dynamic, auction-based payment model to get
into the inbox. The Promotions tab is the first step in that direction. Gmail
ads have been the next step. I would expect them to start adding them spread
out through your inbox feed in the not too distant future, and then start
drastically tapering brand reach unless you pay up like FB has done.

Additionally, their push for bots and voice search is to have people ask
questions and just provide the answer and not give a list of choices. They
want to know you well enough where they can guess right, but the options they
provide are all paid placements, so you get the most relevant paid placement.
It won't happen now, but once voice assistants are an integral part of the
mobile experience that people can't live without and Google succeeds in owning
the space.

------
perseusprime11
It is time for them to go for the big kill and aquire Twitter. Twitter can
benefit from Google's Machine Learning competency and Google can benefit from
Twitter's social network competency. They should do this before Mark
Zuckerberg's offer they cant refuse.

~~~
bduerst
How? Twitter's data is already publicly available.

------
MarkMc
As a Google shareholder this is great news, but now I'm starting to feel that
the market is underestimating the chance that someone simply builds a better
search engine.

For example, here are 3 search queries I recently performed where I found
Google's results lacking:

1\. What is the best Thai restaurant within 10 kilometres?

2\. What companies have a market cap greater than Microsoft?

3\. Does Android track my location by default?

In each case I don't want to see a list of web pages - I want a single one-
sentence answer (like I would get for "what is the height of the Eiffel
Tower?"). Something like Wolfram Alpha on steroids.

No doubt Google is working on this problem, but what is the chance someone
else beats them to it? And how much damage would it cause Google if they do?

~~~
killerdhmo
Heyo, I tried the "Best Thai Restaurant near me" and got a result with a list,
pins on a map, etc. So, it could be a query thing. (screenshot)
[https://www.dropbox.com/s/lr01wno3aqskoan/Screen%20Shot%2020...](https://www.dropbox.com/s/lr01wno3aqskoan/Screen%20Shot%202016-07-28%20at%206.13.04%20PM.png?dl=0)

This worked across desktop and mobile. You're right, that it doesn't handle
specifically within 10km, but I thought I would mention it if it was an acute
need!

------
bitmapbrother
After hours is through the roof. It's currently at $808 as of this time. I
wouldn't be surprised if Google is the world's most valuable company tomorrow.

~~~
MarkMc
Apple still beats them, I think. At $808 Google's market cap would be around
$550 billion, while Apple's is currently around $600 billion.

------
em3rgent0rdr
paywall;dr

Could major election year be a significant contributor?

~~~
malchow
Cofounder/owner of large political ad exchange here. Yes, the election is a
major contributor. But not in the quarter Google is reporting on now.

------
EGreg
Facebook, Google, Amazon all surge! Why?

~~~
mrtron
They made more money than the markets expected.

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zump
Wish I could get a job at Google :(

~~~
knicholes
Why can't you?

~~~
zump
Too anxious to interview.

------
api
This is all good news for our industry. Soft numbers among the top players
trickle down in the form of reduced demand and investor interest for earlier
stage companies. Good numbers send a signal that the industry is healthy.

Edit: wow stepped on a mysterious hater button. :P

~~~
w1ntermute
Or it could be a sign that the industry is consolidating and that there's no
point in investing in non-FANGAM companies.

~~~
gohrt
> FANGAM

Does Netflix fit in that top-6?

~~~
rocqua
It's probably on there due to it's disruptive nature.

------
vonnik
In other words, Google profits surge because it is using TensorFlow to
accurately predict how to price ads to maximize revenue.

~~~
connoredel
That's not how it works at all. It's a market: there is a limited supply of
impressions/clicks, and it is _buyers_ who decide the price. Buyers are
rational -- I like to take that charitable view at least -- and are bidding
less than the value to their businesses of those clicks. CPCs are actually
down on average. If that's true, then it must be simply inventory growth:
mobile is providing ever more interaction points with consumers.

~~~
vonnik
Market prices are determined by the intersection of supply and demand, so it
is not just the buyers who choose. Google has some say over the supply. They
may increase or decrease the supply based on behavior they sense more broadly
in search.

It's amazing to see on HN that some of the times I am most right, I am also
most downvoted. Life lessons...

~~~
soared
Well Google is the intermediary. They can (and undoubtedly do) directly affect
supply, demand, and price. They can purchase ad space from a publisher for
$0.45, mark it up x, and sell it. They can slow demand by temporarily (even
for seconds at a time) by increasing cpc. They can lower supply by lower bids.
They could in theory even pre-sell ads when supply is in excess.

