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Google Profits Surge on Strong Ad Demand

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Re: Google Profits Surge on Strong Ad Demand

#41

Post by adventured »

em500 wrote: post #21
ariwilson wrote: post #7

Earlier quoted context omitted.

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.

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.

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.

Re: Google Profits Surge on Strong Ad Demand

#43

Post by MicroBerto »

akavi wrote: post #30
paulpauper wrote: post #29

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. J…

> in the 90's..the growth was finite, but there is no limit to Facebook, Google and Amazon. "This time, it's different."

Reminds me of the phrase,

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

Re: Google Profits Surge on Strong Ad Demand

#44

Post by adventured »

gallonofmilk wrote: post #37
paulpauper wrote: post #29

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. J…

I predict that in the next 10 years you're going to see major shifts and companies like Facebook will be eaten for lunch

Zero chance of that. Facebook will be doing $16 to $20 billion in profit within five or so years. They'll have accumulated $60 to $80 billion in cash. They'll have a half trillion dollar market cap in the next few years. They'll liberally use the cash and market cap to buy into any market they're missing out on, just as Microsoft purchased LinkedIn and Skype to try to stay in the game.

These types of companies do not dislodge so easily such that they get "eaten for lunch" in the mere span of ten years. It's the exception for one of them to implode. This is especially true given that Facebook is still ramping, their sales growth is still extraordinary and their daily actives are still growing just fine for their size. They likely won't even peak on users for a few years, at a minimum; and afterward, they still have years to grow their non-US ad business a lot, because that part of their business is wildly non-optimized.

In ten years, Facebook will just be reaching the equivalent business plateau that Microsoft hit circa 2000-2003. They're still a very young business in the first half of their growth phase, they haven't even reached mild stagnation yet. A business doing $2 billion in quarterly profit, growing sales at 50%, and they're going to get eaten for lunch within a decade? It's extremely unlikely, as the mountain of cash they're accumulating will buy their continued place in the ecosystem, whether the anti-FB crowd likes it or not.

Re: Google Profits Surge on Strong Ad Demand

#45

Post by 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.

Re: Google Profits Surge on Strong Ad Demand

#46

Post by connoredel »

vonnik wrote: post #14

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

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.

Re: Google Profits Surge on Strong Ad Demand

#47

Post by ethanbond »

adventured wrote: post #44
gallonofmilk wrote: post #37

Earlier quoted context omitted.

I predict that in the next 10 years you're going to see major shifts and companies like Facebook will be eaten for lunch

Zero chance of that. Facebook will be doing $16 to $20 billion in profit within five or so years. They'll have accumulated $60 to $80 billion in cash. They'll have a half trillion dollar market cap in the next few years. They'll liberally use the cash and market cap to buy into any market they're missing out on, just as Microsoft purchased LinkedIn and Skype to try to stay in the game. These types of companies do not…

With logic like that it's remarkable that our markets aren't dominated by 50, 100, 200, even 500 year old goliaths.

"They're big! They'll be here forever and only get bigger!"

Re: Google Profits Surge on Strong Ad Demand

#50

Post by ethanbond »

vasaulys wrote: post #2

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

I think we'd see a surge in ad purchasing right before the death of it. Why does no one see this uptick in ad spending a potential indicator that advertisers are getting less of their money's worth?
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