
Google Reports Better-Than-Seen Revenue Growth - reflect
http://online.wsj.com/articles/google-reports-22-revenue-growth-1405628219
======
ChuckMcM
Continued erosion of the CPC number (down 2% Q2Q, 6% y/y) so for those who
haven't been following this like I have here are the last fourteen quarters:

    
    
            	Paid Clicks	Cost Per Click	Paid Distribution
       	      Q-2-Q	Y-A-Q	Q-2-Q	Y-A-Q	In $M
       2011Q1	18	4	8	-1	337
       2011Q2	18	-2	6	12	355
       2011Q3	13	28	-5	5	383
       2011Q4	17	34	-8	-8	442
       2012Q1	7	39	-6	-12	468
       2012Q2	1	42	1	-16	507
       2012Q3	6	33	-3	-15	556
       2012Q4	9	24	-2	-6	634
       2013Q1	3	20	-4	-4	680
       2013Q2	4	23	-2	-6	706
       2013Q3	8	26	-4	-8	755
       2013Q4	13	31	-2	-11	824
       2014Q1	1	26	0	-9	845
       2014Q2	2	25	-2	-6	893
    

Cost per click is the money that Google gets per click, it keeps going down
suggesting to me that the "value" of this advertising is going down. Paid
Clicks are clicks on Google ads which are up impressively but my observation
is that there are a lot more of them in places than before. And lastly Google
is paying nearly $900M/quarter (that is a 3.6B% annual run rate) to "buy"
traffic to their properties. From that I conclude that Google's "specialness"
is losing its luster, and that results from other services are "good enough".
Doing this same math on Bing results and you will see that Microsoft is
capturing the lion share of the value that Google is losing here. (and while
Blekko is a search engine, we figured out earlier that you couldn't buy
traffic against a competitor willing to spend billions a quarter) The other
observation is that this realistically, this can't go on. Eventually Bing will
be getting equal CPC with Google, and at that point trying to buy traffic or
force the use of a particular browser that will only go to one search engine
reliably, will make you less competitive than the more efficient guy down the
street. I can't wait :-)

~~~
nostrademons
I think you're seeing a Simpson's Paradox effect with those. CPC for both
mobile and desktop is going up (my supposition, I don't have numbers on this).
However, mobile CPCs are less than desktop CPCs, and the query mix is
continuing to shift to mobile. As a result, aggregate CPC goes down.

This also explains the Bing results. Google owns mobile search, so the shift
toward mobile (with its lower CPCs) disproportionately affects them. Microsoft
continues to flounder in mobile, so their average CPC will be higher right
until it becomes nonexistent.

Strategically, this is a good trend for Google. They're being disrupted, but
they own the primary disruptor.

~~~
mandeepj
> Google owns mobile search

Google does not own mobile search. Infact it is struggling[1] big time in
mobile search. People do not use google to search on mobile. Infact, they use
specialised apps like yelp, priceline etc to search for what they need.

[1] [http://www.nytimes.com/2013/07/19/technology/google-
misses-e...](http://www.nytimes.com/2013/07/19/technology/google-misses-
expectations-for-revenue-and-profit.html)

~~~
toomuchtodo
Don't they own AdMob, one of the top ad platforms on Android?

[http://www.google.com/ads/admob/](http://www.google.com/ads/admob/)

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rubiquity
If you come to this link about Google from Google.com by searching "Google
Reports 22% Revenue Growth" you can skip the pay wall.

[https://www.google.ca/search?q=google+reports+22%25+revenue+...](https://www.google.ca/search?q=google+reports+22%25+revenue+growth)

~~~
nbody
Thank you. F@$!#% paywalls

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hyp0
\tangent Google is commited to increasing revenue, but I loved their early
idea, of showing you relevant ads that you would _want_ to see. Similar enough
to goto.com/overture's idea, of search _purely_ for ads. You're far more
likely to pay attention, to click, to buy. And it's sustainable indefinitely
because net-better for the world.

Although, judging from advertising in general, it may be better for
advertisers to get your attention whether you want it or not. And they are the
ones who decide whether the advertising occurs.

But if another company did ad-relevance better than Google, more efficiently
(cheaper) and effectively (clicks, sales), it seems that Google couldn't beat
them, because the revenue at first would be lower and Google is Wall St-
committed to increasing revenues. They would have to acquire the new company
(if they could).

Unfortunately, ad-relevance requires data about the person, and Google is best
placed for this (alongside Facebook). Despite the privacy-backlash, people
increasingly live online and accept the loss of privacy. So, instead, we have
startups with new ways to gather new personal data, and are acquired by
Google/Facebook.

------
IBM
I've lost track of how many quarters in a row CPC has declined. I think it's
12 or 13 now.

~~~
Hermel
Do you happen to know the reason? Are more ads being served in countries with
lower prices? Or is it due to competition?

~~~
CaveTech
Probably due to a lot of factors, but the biggest one is likely ad blindness -
People just don't notice Ads anymore. It's especially prevalent in kids but
it's probably also taking ground with adults now too.

~~~
wutbrodo
This would have nothing to do with the effect shown. Paid clicks (i.e. the
number of actual clicks on ads) have been growing rapidly over the same time
period. Dropping CPCs are pretty obviously a result of the mix shifting to
mobile (particularly since both mobile and desktop CPCs are rising).

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jcampbell1
It would be interesting to know how much removing the background color from
the Adwords ads above the organic results effected profits.

I find myself clicking adwords ads frequently since the change. They
practically look identical. I imagine it was a nice boost to revenue.

~~~
VikingCoder
What are you talking about? Do you not see the giant, golden "Ad" next to each
ad?

~~~
yabatopia
It happens to me too now and then and I'm pretty sure that we're not the only
ones. The Ad icon I see is far from gigantic and more blueish than gold, it's
very easy not to notice you're clicking on an advertisement. Maybe15 years of
using Google and relying on the first search results on top has caused some
sneaky "Ad" blindness.

Sometimes I feel sorry for the advertiser when I accidentally click such
sneaky text Ad, especially when the first real, natural search result is the
link to the advertising company's website, just below the Ad. It feels like a
devious way to rip off advertisers who would have been first anyway.

~~~
shkkmo
Yeah, given the number of times that I have used google to pull up a website,
and the company also had the top add makes it seems like they are paying for
what they already get.

However, they are also blocking a competitor from placing an ad there and
potentially siphoning off traffic.

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davis_m
Direct link to the filing if you are interested:
[http://www.sec.gov/Archives/edgar/data/1288776/0001288776140...](http://www.sec.gov/Archives/edgar/data/1288776/000128877614000058/googq22014exhibit991.htm)

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programminggeek
More clicks, less value. Seems like mobile is driving down the CPC.

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smackfu
Fancy, Google's stock box now has after hours charting.

[https://www.google.com/search?q=goog](https://www.google.com/search?q=goog)

~~~
alanpca
[https://www.google.com/search?q=goog#nfpr=1&q=googl](https://www.google.com/search?q=goog#nfpr=1&q=googl)

------
sscalia
"Google has become 22% better at selling its users habits and personal
information to advertisers"

~~~
skj
Starting off with an admission that I'm a Google fanboy and employee...

I _hate_ this sentiment. It's silly. Google does not sell any information to
anyone. Google just shows people targeted ads.

If you can show a way to infer personal details from the mere fact that
someone is shown a particular ad (or particular huge set of ads), then publish
your results so Google can figure out how to not leak that information.

~~~
duncanawoods
There is only a subtle distinction between selling an information service like
targeting and selling the underlying information.

Consider, a mobile phone network that sold drone strikes on its users using
the privileged information they have on their location. The precise flow of
money and information is not that important to the consequence for the end
user.

Google targeting is "using information about me to benefit another company for
financial gain of Google". It is not silly to call this selling...

~~~
skj
Firstly, comparing ad views to drone strikes is absurd in any context, and the
only purpose can be some terrible appeal to emotion. Even if we were to go
with this analogy, the person purchasing the drone strike still doesn't have
the privileged information. So, even in this absurd world, no information was
sold. The fact that it's terrible for the user (almost as bad as seeing an ad
on a site in exchange for that site costing no money!) is irrelevant.

Secondly,

> It is not silly to call this selling...

yes it is! When you sell X to someone, at the end of the transaction, they
have X! Otherwise it's not selling!

~~~
duncanawoods
Selling information, licences and services is different from physical goods
but its still called selling. If you deliberately treat this too
simplistically then yes, you won't be able empathise with people's discomfort
with Google's business model. I'm sure you do actually appreciate how
information services have this weird sort of transitivity.

The drone strike is not chosen for emotion but because it shares the targeting
concept. If the mobile network didn't know your location, they cannot sell the
service. If they do know your location they can. The difference between these
two cases is the latter service includes, in some fashion, your location.

Is your location being sold to your enemy? You can argue the terminology but
if you look at the consequences, your enemy has attacked you in your secret
location because they bought something from the mobile network company.

~~~
skj
When information, a license, or a service is sold, the buyer now has
information, a license (or general right to do something), or has benefited
from some service.

Google sells clicks on ads. Once a click is bought, the buyers now has
eyeballs on their websites. Not the information about the person doing the
clicking. So, the information about the person doing the clicking is not sold.

The drone analogy is inapt.

~~~
duncanawoods
I'm going to have a last go because to work at google, I believe you have a
moral imperative to understand why the analogy is apt.

Selling consequences of information in some very real sense includes the
information. In your terms, the "benefit from some service", is a targeted ad
which is a causal consequence of user information. A derived work if you like.
Information isn't just one specific pattern of bits.

The drone analogy vividly demonstrates how selling a consequence, killing
someone in a secret location, really does include their location as an
intrinsic part of the service sold even if no-one actually hands out the
lat/long.

~~~
skj
If we want to make the analogy apt, it would be like the mobile service saying
"To make a phone call, please first call the kill-yourself company and tell
them where you are so they can kill you."

Google does not sell the information. It puts up ads that users may (or may
not!) click on. The clicking is the point at which the information transfer
occurs, and it is voluntary and transparent. Or as transparent as it can be,
anyway - if you are unaware of how the internet works when you click on a
link, that does not make Google culpable for presenting said link.

The information Google has about the user is never given to anyone, least of
all the ad buyers.

