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Google Profits Surge on Strong Ad Demand

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Re: Google Profits Surge on Strong Ad Demand

#71

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.

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.

Re: Google Profits Surge on Strong Ad Demand

#72

Earlier quoted context omitted.

Fair enough. I'm perhaps overly cynical when I see this much optimism.

Optimism? It's simple extrapolation and a quick historical reference on how equivalently massive companies hold up over the near-term (5-10 years). I wasn't offering up an optimistic scenario. In just three years they'll very likely hit $13 to $15 billion in annual profit or so (it'll be $8.5 to $9 billion in the next 4 quarters alone), and have $50+ billion in cash. What is inbound in the next three years that will…

I mean that I took a cynical read e.g. skimmed that you were specifically talking about the near term.

Re: Google Profits Surge on Strong Ad Demand

#73
post #2

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

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.

You forgot the most important part: making ads more targeted. More more targeted an ad is, the more you can charge for it. So Google can sell the same number of ads to the same number of advertisers and yet make more money, while advertisers get more bang for their buck.

Re: Google Profits Surge on Strong Ad Demand

#74

Earlier quoted context omitted.

Still a lot of print magazines to kill and ad dollars to move from TV to online.

Yeah but TV ads have the nice advantage that you can't easily block them - unless you're timeshifting, that is. And muting, well, it blocks the audio, but you still see the video that can get a message across. Also, print ads, given a sufficient niche-ness of the magazine, are way better targeted to actual customers than web ads.

Bloomberg actually did a decent writeup on this.[1]

[1] http://www.bloomberg.com/news/articles/2014-03-03/advertisin...

Re: Google Profits Surge on Strong Ad Demand

#75

Earlier quoted context omitted.

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!"

I think it's because a lot of those giants were commodities and could easily be replaced. Companies have learned the impact of branding, and they're now tied into our identities. So the social aspect keeps companies relevant and in power.

With regards to Facebook, when I'm looking over people's shoulders, what are they doing? Checking out their Facebook timeline, or Instagram, (or playing Pokemon Go for the time being). To unseat Facebook, Facebook would need to really betray the public's trust, and a competitor would have to provide an equally comprehensive service (and helpful migration tools). Google Plus's timing was poor and seemed to share everything with the pubic. ello had good timing, but they were invite-based and the minimal interface seemed like it lacked features.

Facebook is the AOL of the present, but unlike AOL they've managed to adapt (or acquire) to users' changing mediums for socializing.

Re: Google Profits Surge on Strong Ad Demand

#77

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…

One can (and should!) argue that their great growth prospects are baked into their stock prices already.

Re: Google Profits Surge on Strong Ad Demand

#78

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

Look how long Yahoo stuck around. These companies have massive inertia.

It stuck around for a long time, but it's stock price has been crushed.

Re: Google Profits Surge on Strong Ad Demand

#79

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…

There is a limit. However, all of this growth is partly due to previously unexploited advertising/marketing demand. Older mediums like newspapers/magazines, TV, and radio only served to a small niche of potential advertising buyers. Facebook, Google, etc. make it easy and cheap for anyone to advertise pretty much anything.

Re: Google Profits Surge on Strong Ad Demand

#80
post #2

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

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.

In addition, the online advertising market is growing naturally as more people get connected to the internet and already-connected people get wealthier. This is why Facebook is so keen to dominate the Indian market that they are willing to offer free (but not net neutral) internet access.
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