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Sunday, February 19, 2012

Google Sells $5 Billion in Online Display Advertising

Search Still Drives Google, but Display Ads a $5 Billion Business
Thu, 19 Jan 2012 17:51:01 -0500 Delo)
Citing a strong holiday season, Google reported a 25% increase in fourth-quarter revenue and a display advertising business that has doubled in the last two years.

While revenue and profits were up sharply, both fell short of analyst estimates, sending shares down more than 8% in after-hours trading. The company attributed the shortfall to fluctuating foreign-exchange rates. Google makes nearly half of its revenue outside the U.S.

Google reported $8.13 billion in sales, excluding revenue passed on to partner sites. Gross revenue was $10.58 billion, up 25% from a year earlier. Net income was $2.71 billion, up from $2.54 billion in the year-earlier period but down slightly from $2.73 billion in the third quarter of 2011.

More important for Google, the world's biggest search engine became less dependent on search advertising alone: Display revenue, including network ads and YouTube, has become a $5 billion annualized business, according to CEO Larry Page. In October 2010, Google announced that display had become a $2.5 billion business.

"I'm most excited by the fact that we improved our velocity and execution," said Mr. Page, noting that the fourth quarter was the first time that revenue had passed the $10 billion mark.

In addition to the $5 billion run rate for display, Google reported that its DoubleClick ad exchange had 130% growth in spending year-over-year. One driver of display growth was marketer interest in buying for specific audience categories -- such as hybrid-car buyers or adventure travelers -- which the technology now can target, according to SVP-Advertising Susan Wojcicki. She said display's growth is also being driven by brand advertisers' interest in YouTube's relatively new TrueView format, where advertisers pay only when viewers opt-in to watch an ad.

FordGeneral Motors, Electronic Arts and L'Orealwere cited as marketers moving ad spend toward Google's display network and YouTube.

Google's share of U.S. display-ad revenues grew to 9.3% in 2011 from 8.6% in 2010, according to an estimate from eMarketer. It predicts that Google will tie Yahoo in display ad revenues this year, with each sharing a little over 12% of the market.

While Google doesn't break down its advertising revenues by search, display or mobile, SVP-Chief Business Officer Nikesh Arora said that Black Friday and Cyber Monday had "led to strong performance across the product portfolio."

Google didn't offer any specifics about its mobile business, but reported in October that mobile had become a $2.5 billion run-rate business, up from $1 billion a year earlier.

360i's CEO Bryan Wiener said he had expected a strong showing from Google in mobile -- where its share of search is dominant -- after Black Friday and Cyber Monday, when mobile search exploded.

"What's lifting them seems to be a tipping point in consumer behavior," Mr. Wiener said, also noting that he had expected Google's display business to benefit from YouTube's redesign and the momentum it generated for brand display advertising.

Mr. Page also reported that Google+ now has 90 million users, vs. 40 million reported last fall. He said that 60% of users engaged on the network daily and 80% weekly.

He also said that 700,000 Android phones are activated every day, with 250 million now in use.

[Sent from Ralph Paglia's iPhone]

Ralph Paglia
Vice President - Digital
Tier10 Marketing 

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