Google Slays Earnings Beast, Smacks ComScore
Mess with Google's mind share, and feel the backlash. That's the lesson ComScore learned Thursday after Google handily beat first-quarter financial expectations by announcing a 31 percent profit and paid click growth of 20 percent.
No one is disputing Google's paid clicks are down--they grew 30 percent last quarter--but ComScore foreshadowed something worse than what it was and found itself at the business end of an 8 percent drop in shares. Meanwhile, Google shares burbled up 17 percent in after-hours trading.
Don't think Google didn't pay attention to the paid click naysayers. On the call Thursday, Google Chief Executive Eric Schmidt said: "It is also interesting to note that paid click growth is much higher than has been speculated by third parties." If that isn't a dart lofted in the direction of ComScore, I don't know what is.
Google racked up 100 search quality improvements in the quarter, according to co-founder Sergey Brin. Most of these improvements were made overseas in countries such as Japan and Korea.
There is also a new search-within-a-search feature to help users search better within a site, a tool that has sparked controversy among retailers concerned about Google usurping their ad traffic.
And, just yesterday, Google News started providing quotes to accompany searches of folks such as Barack Obama and Hillary Clinton. I don't have much use for this, but it's the kind of the feature that will be a boon for college students doing research papers.
Brin was also quite proud of Google's improved mobile search quality and market growth, as well as a new version of YouTube Mobile.
Google co-founder Larry Page talked up the company's ads and Apps. Page noted the company launched demographic targeting in its ads on social networks. When pressed on more details for this during the Q&A, he said:
"The challenge and the opportunity there is [that] there's a huge amount of inventory. We have obviously MySpace, Orkut in our network and a number of other social networks. There's a lot of usage of those, so there is a tremendous amount of inventory. Part of it is just getting that advertiser ecosystem built up and targeting that inventory and doing it in a way that makes sense for those advertisers."
Unfortunately, no vendor has really figured out how to do that yet and there have been more failures (Beacon) than marked successes. There is inventory, but will Google succeed in placing it? My money is on yes now that it has seen the failures of others.
YouTube got Google particularly excited in Q1. Noting that 10 hours of video are uploaded every minute at YouTube, Page said InVideo ads are getting great adoption, with customers broadening their campaigns for the format.
Moreover, AdSense for Videos lets InVideo ads run on sites besides YouTube. He said these were doing well, with much more click-through ads than banner ads.
The big news in Google Apps for the quarter was Google Sites, which is essentially the company's JotSpot assets reimagined by Google. Offline access for Google Docs and the new Salesforce.com integration received honorable mentions.
Oh yeah. Google won Fortune's best place to work award for two years in a row. As long as those ad dollars from paid clicks keep rolling in, and the profits keep the company in the black, I don't see this changing, regardless of what happens with Microhoo in 2008.