January 20th, 2012 No Comments

What Does Google’s Disappointing Financial Year End Results Mean to Search Marketers

My first degree was actually a BSc in Economics but I shied away from this fascinating discipline to join the army of marketers…online marketers to be precise! This is not to say that headlines related to Finance & Economics do not grab my attention – they absolutely do! Whilst prowling through my G+ stream yesterday, I came across this post from Google’s Larry Page:


And then this post from Avinash Kaushik:

It led  me to their Q4 2011 financial summary and Year end report and YouTube webcast.

Here are some take-aways I think every search marketer should take note of from their year end report:

Financial Results were not that Great…

First off, even though Year on Year revenue jumped up by 29% and their $10.58bn Q4 earnings in 2011 were a 25% increase from 2010′s Q4 figures, their results were still disappointing and below analysts expectations - profits per share were expected to be $10.50 but turned out to be $9.50 a share, thereby sending Google’s share price down by 10%.

Google Invested a Huge Lot on Google+ and Android…

Google’s operating expenses other than cost of revenues i.e. their investments in Q4 2011 accounted for 32% of revenues at $3.38 billion. In comparison to Q4 2010′s investments of $2.51 billion; it is quite obvious that Google invested quite a lot in their social network site: Google+. From Larry Page’s opening keynote, they were also very serious with the development of their mobile platform: Android, which is currently on 250 million devices that have 44 apps installed on average.

Google+ Usage is Growing…Watch this Space!

Google+ has 54 million active users daily; 70 million active users weekly and 90 million registered accounts!
Gmail has 350 million active users – not to far off from my 300 million estimate in my previous post (point #4) & all registered Gmail users are just a click away from being G+ users!

Google is Diversifying its Income Stream

Google-owned sites accounted for 69% of its Q4 revenue – they generated $7.29 billion a 29% increase over Q4 2010 revenues of $5.67 billion which accounted for 67% of total revenue in Q4 2010.

AdSense and other Google ‘Partner’ Sites Are Slowly Taking a Smaller Piece of the Pie:

Google’s partner sites accounted for 27% of 2011 Q4 earnings, generating revenues of $2.88 billion- a 15% increase from Q4 2010 network revenues of $2.50 billion but partner sites accounted for 30% of Google’s Q4 earnings in 2010.

Google’s Biggest Markets

Google made about half its revenue (48%) in Q4 2011 from the U.S. – a total of $4.38 billion.
Google made 10% of its revenue from the UK totalling $1.06 billion (In Q4 2010, the UK also accounted for 10% of total revenue at $878 million)

Advertisers Bidding Less for More Clicks

Whilst paid clicks via AdWords & AdSense increased by 34% from Q4 2010′s figures and 17% from Q3 2011′s figures, Average cost-per-click decreased by 8% from Q4 2010 and decreased by 8% from Q3 2011. In essence Google is giving a lot more clicks for less money, probably because advertisers are not willing to place higher bid as a result of a tougher economic climate or using the paid search budgets in other properties such as Facebook & Microsoft AdCenter.

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