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Google Inc. First Quarter 2014 Results
Cost per click fell 9 pct
engine




msg:4663742
 9:05 am on Apr 17, 2014 (gmt 0)

Google published its latest revenues in its first quarter. Cost per click falling is the thing that stood out for me.

"We completed another great quarter. Google's revenue was $15.4 billion, up 19% year on year", said Larry Page, CEO of Google. "We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses." Google Inc. First Quarter 2014 Results [investor.google.com]
Revenues and other information - Google Inc. revenues for the quarter ended March 31, 2014 were $15.42 billion, representing a 19% increase over first quarter of 2013 revenues of $12.95 billion.

Sites Revenues - Our sites generated revenues of $10.47 billion, or 68% of total revenues, in the first quarter of 2014. This represents a 21% increase over first quarter of 2013 sites revenues of $8.64 billion.
Network Revenues - Our partner sites generated revenues of $3.40 billion, or 22% of total revenues, in the first quarter of 2014. This represents a 4% increase over first quarter of 2013 network revenues of $3.26 billion.
Other Revenues - Other revenues were $1.55 billion, or 10% of total revenues, in the first quarter of 2014. This represents a 48% increase over first quarter of 2013 other revenues of $1.05 billion.

International Revenues - Our revenues from outside of the United States totaled $8.76 billion, representing 57% of total revenues in the first quarter of 2014, compared to 56% in the fourth quarter of 2013 and 55% in the first quarter of 2013.
Our revenues from the United Kingdom totaled $1.58 billion, representing 10% of total revenues in the first quarter of 2014, compared to 11% in the first quarter of 2013.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 26% over the first quarter of 2013 and decreased approximately 1% over the fourth quarter of 2013.
Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 9% over the first quarter of 2013 and remained constant from the fourth quarter of 2013.

TAC - Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.23 billion in the first quarter of 2014, compared to $2.96 billion in the first quarter of 2013. TAC as a percentage of advertising revenues was 23% in the first quarter of 2014, compared to 25% in the first quarter of 2013.

The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.39 billion in the first quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $845 million in the first quarter of 2014.

 

pawas




msg:4663937
 8:27 pm on Apr 17, 2014 (gmt 0)

My revenue was -35%, Thank you Google!

Sgt_Kickaxe




msg:4663939
 8:44 pm on Apr 17, 2014 (gmt 0)

Mine was lower too. Google sends me 10% of the image traffic they used to with their new image search layout and I'm fighting pages from big brand sites that are extremely poor in quality(ie:user gen "guide" pages that big brand has figured out works right now).

Will their decline continue next quarter? Online advertising is at an all time high with no sign of slowing apparently.

martinibuster




msg:4663945
 8:59 pm on Apr 17, 2014 (gmt 0)

I haven't looked at the report but my guess would be that Google's inability to fully grasp mobile is eating at their CPC.

superclown2




msg:4663946
 9:13 pm on Apr 17, 2014 (gmt 0)

Leaving search out of the Google equation, the peripheral activities are not contributing much to the bottom line. OK they are mostly relatively new ventures or even startups but youtube isn't and it still makes little if any profit. The prices that G have paid for some of these businesses are eye watering and worrying a lot of investors who don't get a dividend so rely on a constantly rising stock price to make money from their investment Where will this come from? Display and video ads are doing poorly and a lot of Google ventures have been launched in a welter of publicity only to fail dismally. In the meanwhile India is refusing to be browbeaten, the deal with Almunia looks to be dead in the water and Europe hasn't even started on privacy and Android concerns.

For all of the huge investments they have made the company is still a one trick pony. If search fails the company will fail.

The Internet is a fickle environment where today's darling is tomorrow's sad failure. Those of us who have been in business a long while have seen many companies shoot for the stars just to crash and burn when the fuel ran out.

martinibuster




msg:4663948
 10:20 pm on Apr 17, 2014 (gmt 0)

superclown2, many of the analysts were concerned about the same things you mentioned! :)

Google Again Disappoints [forbes.com]

Most of the concerns voiced by analysts on the conference call echoed those of the last few quarters. They included lower prices per click on search ads, due in part to the lower prices commanded by mobile ads; how new ad formats such as “product listing ads” and skippable video ads on YouTube are doing; and the impact on profit margins of investments in a blinding array of new businesses, from thermostat and smoke alarm maker Nest to so-called “moonshots” such as balloon- and drone-based Internet access, cloud computing, wearable computers such as Google Glass, robots, and of course self-driving cars. All of those new initiatives seem likely to be less profitable than its lucrative search ads.

nomis5




msg:4663954
 10:44 pm on Apr 17, 2014 (gmt 0)

Google's revenue was $15.4 billion, up 19% year on year


Pick holes as much as you like but that's a supremely impressive performance.

G are having problems converting mobiles but I can't see anyone doing better.

Andem




msg:4663955
 10:49 pm on Apr 17, 2014 (gmt 0)

+1 superclown2

During our existence, we've seen many different search engines, advertising networks, entertainment sites and more since 1997. Until now, Google has been the most successful and in many cases, the best.

As a one-trick pony, you're right. The problem is that many don't understand that it isn't actually *that* difficult to beat Google at their cash cow game; I know it would only take a few college kids with enough energy and intelligence to write some code over a few weeks to demolish Google's supremacy at the ability to "organize world's information", but in a much more privacy-friendly way.

Since data storage and processing power is a really cheap investment these days, it would require such a minimal amount of capital. No Wall St. snakes would be required.

With that in mind, I wouldn't invest in GOOG. Google needed no real marketing effort to become the defacto "web" and neither would something much better.

blend27




msg:4664166
 2:23 pm on Apr 18, 2014 (gmt 0)

it would only take a few college kids with enough energy and intelligence to write some code over a few weeks


+1(Plus one as in "one more person") slimy investor with 10% stake in the startup that will sell his/her share at a premium when the sensation occurs.

That is the way it is....

IanKelley




msg:4664294
 12:27 am on Apr 19, 2014 (gmt 0)

I know it would only take a few college kids with enough energy and intelligence to write some code over a few weeks to demolish Google's supremacy at the ability to "organize world's information", but in a much more privacy-friendly way.

10 years ago maybe. I'd love for it to be true, but modern search is a lot more complicated than you realize.

EditorialGuy




msg:4664391
 2:18 pm on Apr 19, 2014 (gmt 0)

For all of the huge investments they have made the company is still a one trick pony. If search fails the company will fail.


That's a pretty big "if." According to The Register, Google spent $2.35 billion on its data centers in the first quarter of 2014 alone. Any company that hopes to unseat Google needs more than a good idea: It also needs a ton of money to invest in infrastructure.

superclown2




msg:4664410
 3:32 pm on Apr 19, 2014 (gmt 0)

Any company that hopes to unseat Google needs more than a good idea: It also needs a ton of money to invest in infrastructure.


Government anti-trust action? Crusading journalism? Sustained, aggressive click fraud? Apps? Europe actually enforcing privacy laws (remember that Google's whole strategy is built on tailoring ads to individuals based on collected personal data; something which is illegal over here)? Further deterioration in CPC? Global 'ad overload'? More products like Amazon's Kindle (what a brilliant idea!)that let us look at, read reviews on and buy all sorts of products without Google? Search marketing deals with manufacturers of cheap tablets like the sub-£30 UbiSlate? Just a few ideas right off the top of my head of ways that G could be brought down. Do you remember when we all clicked on banner ads? When we bought clicks from Looksmart, Overture, Yahoo? Were you around during the CB radio craze then it's total disappearance? Would you ever have believed that huge numbers of English pubs would suddenly go bust? Where are GEC, ICI, The British Empire now? All too big and well entrenched to fail but all gone now. And finally can you name a single monopoly that has survived long term?

There are bright people out there with new ideas. Things will change. This is the one and only fact you can be sure of.

moTi




msg:4664444
 8:10 pm on Apr 19, 2014 (gmt 0)

the task is not only to build a better search experience, but to move people over there. as long as google is good enough for the users, they won't change their habits. that is they won't try competitive products en masse, no matter how cool they come along.

the first part of the exercise doesn't seem impossible. despite all that bull pr talk from google execs over the years what search will be in the future: the act of doing a search on the internet surprisingly really hasn't changed at all since 20 years. enter keywords in search box and get more or less relevant results - room for improvement. well, and the second part would mostly consist of a massive advertising campaign to gain market share, just like google itself did successfully in the browser market with their oh so novel chrome browser.

as for the one-trick-pony thing: google got their billion dollar ticket not before an employee had the idea to develop a contextual ad system (not even an invention, derived from overture afaik). all their wealth is based on this.
slightly reminds me of yahoo, only that they came across their only random cash cow not until decades of miserable existence: a share in alibaba, a hugely profitable chinese wholesale platform.

superclown2




msg:4664453
 9:16 pm on Apr 19, 2014 (gmt 0)

I mentioned the Kindle above; and recently Tesco Argos and Aldi brought out their own tablets here in the UK, all with the sole purpose of selling their own products. All of them sold out in no time and the supermarkets are having real difficulty keeping up with demand. Prices are falling and I wouldn't be surprised to see them given away with packets of cornflakes soon. And all this is happening with practically no real marketing effort. So how about the search market being replaced by mega retailers producing cheaper and cheaper tablets that they virtually give away? It's no more fanciful than the way that Google rose in the first place.

In my household we buy nothing via Google. We have several deliveries a week from Amazon via my Kindle and I'd buy all our groceries via a Hudl if it wasn't for the fact that my wife actually enjoys shopping. If we need a search engine then using Google would be laughable, I would want facts not the websites of the same big brands over and over again.

This is just one possible scenario. So, long term, where does this leave Google? It is no wonder that these guys, who are intelligent, well educated people who understand the realities of the business world, are rushing to diversify so quickly.

EditorialGuy




msg:4664627
 7:42 am on Apr 21, 2014 (gmt 0)

It is no wonder that these guys, who are intelligent, well educated people who understand the realities of the business world, are rushing to diversify so quickly.


I think it's less about diversifying than it is about expansion. That certainly isn't a new approach: 3M, GE, and Coca-Cola are great examples of companies that have remained successful with their original products or services while adding new ones. (For that matter, Amazon isn't just a bookseller anymore--or even just a retailer.)

Swanny007




msg:4664770
 12:20 am on Apr 22, 2014 (gmt 0)

I had a few click bomb attacks which increased my earnings, maybe that's how GOOG increased earnings this quarter?

superclown2




msg:4665043
 5:14 pm on Apr 22, 2014 (gmt 0)

What a cynic you are.Yep, you could be right.

Swanny007




msg:4665087
 8:18 pm on Apr 22, 2014 (gmt 0)

Well.... Google only took back under $1.00 in invalid clicks... happy me, not cynic. OK, both LOL

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