Google earnings rise 11% in Q2
While Google still struggles to take its Google+ social network from well liked to mass market popular, despite its aggressive promotion of the network, their revenue from Adwords continues to be a cash cow with no sign of diminishing.
The search giant released their 2nd quarter earnings today and revealed that earnings were in line with analysts' targets. So whilst it may be struggling with some of its new products, its ability to make money from advertising remains unrivalled.
The company, based in Mountain View, Calif., has accomplished it by analyzing the data that its search engine gathers about people’s interests to determine how and when to present an ad. Ideally, Google wants to show more ads when a user’s request appears driven by a desire to buy a product, book a vacation or engage in some other kind of commercial transaction.
“We’re serious about providing more intelligent results,” Susan Wojcicki, Google’s senior vice president of advertising, said on Thursday during a conference call to discuss the second-quarter earnings. “We’re moving beyond a search engine that just matches strings of words to one that understands people, the world, the way people do.”
The number of clicks on Google ads in June were 42% up on the same period last year, suggesting that the companies Panda and Penguin algorithm changes have had a positive impact on ads if nothing else. This growth is the highest since Google started reporting click volumes four years ago.
This rise in number of clicks is crucial because the price per click continues to underwhelm. The average price per click fell by 16% from last year, representing the 3rd consecutive quarter of price falls.
This trend is caused by the growing volume of web surfing being done on mobile devices, where ad rates are lower and there is less screen real estate available. It's a problem that Facebook has also been struggling with as they look for ways to make money post IPO.
Investors evidently liked what they saw in the second-quarter numbers. Google shares gained $15.94, or 2.7 percent, to $609 in Thursday’s extended trading. The stock closed Thursday’s regular session at $593.06, leaving the shares down by 8 percent so far this year. In contrast, the Dow Jones Industrial average has risen by 6 percent and the technology-driven Nasdaq composite index has climbed by 13 percent.
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