April 18, 2008 | Friday
Google earnings fine, online retail set to grow
By Jackie Danicki - Blogger in Marketing |News |Online Sales |PPC |Search Engines |Google |Yahoo
Looking at these two pieces of news, you almost wouldn’t guess that there was any kind of economic crunch happening in the world.
Almost.
After the jump: How Google defied expectations on Thursday - and UK web sales are set to exceed them.
First, Google surprised most analysts by reporting numbers as good as these yesterday:
Google-DoubleClick skated through its quarterly earnings call, with a healthy $5.19 billion in revenue for the quarter ending March 31, and operating income of $1.55 billion. At this rate Google is on track to top $25 billion in annual revenue. The company has a nest egg of over $12 billion in cash. The stock price is up $76 (about 17 percent) in after-hours trading as of 3:30 p.m. PDT. And, Google’s search share in the U.S. is nearly 60 percent. All is well at the Googleplex.
Add to the mix the reliable reports that Yahoo is close to signing a deal which would see its search ads outsourced to Google, and yes indeed: All is well at the Googleplex. (Until the regulators come a-calling.)
So why did analysts miss the mark in predicting that Google would underperform? Paul Kedrosky - a highly respected pundit who fully admits he got it wrong - posits a few possible explanations. Maybe:
* Comscore data had people convinced that first-quarter paid click data was disastrous
* It just made sense that online ad spending would be cut, especially given financial services dependency, and Google has to be hurt if/when that happens
* Google missed (sort of last quarter), and everyone assumed the wheel had come off and stayed off
The second bit of news involves some juicy goodness in the form of metrics. To wit:
Internet consumer spend will hit £44.5bn, accounting for 13.6% of all retail spend by 2012, according to a Verdict Research report. Similarly, online retail spending will grow by 32% this year to a value of £19.5bn.
It makes sense that people have a higher incentive to use search and price comparison/recommendation sites when money is tighter than usual. Question for marketers: Are you adjusting your marketing investment accordingly?
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