Google has announced second quarter earnings and has made the market as well as the investors happy. The first quarter, under the leadership of new CFO Ruth Porat, has not only encouraged the investors it also did the stocks – they were up more than 11% as of 2 P.M. PT, hours after it closed the day at $599.91.
Listed below are three major takeaways for a marketer from the Q2 earnings of Google:
1. Revenues up by 11% year-over-year
Two major numbers that made the Google stocks flying are:
- EPS: $6.99 vs $6.73 expected
- Gross revenue: $17.7 billion vs $17.79 billion expected
Google’s revenue grew by 11 percent compared to the year-ago period, while its net income expanded. The firm’s total profit on an adjusted basis totaled $4.82 billion, and $3.93 billion using normal accounting techniques. Google ended the quarter with $69.7 billion in cash and equivalents.
However, Google stated that revenue would have been up 18% if it weren’t for currency fluctuations. The market had expected Google’s revenue to grow just 13 percent over its year-ago quarter. Google ended regular trading worth around $390 billion, reported TC. That values the company roughly $15 billion more than its rival Microsoft, making it the second most valuable company in the world behind Apple.
Additionally, Google site revenues were $12.4 billion, up 13% year-over-year, while Google Networks revenues were $3.6 billion, up 2% year-over-year. That brought the total advertising revenues to $16 billion, up 11% year-over-year. Other revenues, which includes Google’s enterprise business as well as Google Play Store revenues, were $1.704 billion, up 17% year-over-year.
2. Cost Per Click was down and Paid Click were up
Two of the most important numbers Google reports every quarter are cost per click, how much Google can charge for its ads, and paid clicks, how many times people click those ads.
This quarter, CPC was down 11% year-over-year and paid clicks were up 18% year-over-year. Analysts were only expecting an increase of 14%. Last quarter, CPC was down 7% year-over-year and the number of paid clicks was up 13%.
Google attributes the decrease of CPC to the impact of YouTube ads, which don’t make as much money as regular ad clicks yet. Paid click growth has experienced deceleration as well, so the jump from 13% growth to 18% growth. The company on the earnings call also stated that the monetization gap between mobile and desktop ads is shrinking. “Mobile CPC is up and desktop CPC is not declining,” Porat says.
In past quarters, this trend was blamed on the rise in mobile consumption making ads less valuable. But Google now attributes the decline in average click pricing to an increase in YouTube advertising—rates can be lower because the marketing is different than it is on search.
YouTube Trueview ads, those skippable ads, monetize at lower rates, Google said.
3. YouTube average spend rose to 60 percent
Porat didn’t comment on the revenues but highlighted growth in YouTube revenues and strength in mobile search as factors behind the strong quarter. “Growth in watch time on YouTube has accelerated and is now up over 60% year over year, the fastest growth rate we’ve seen in two years,” she says. “Mobile watch time has more than doubled from a year ago.”
YouTube’s mobile users averaged 40 minutes per session during Q2, which represents a 50 percent increase year over year. The number of advertisers rose 40 percent year over year on the video platform, while the average spend of YouTube’s top 100 advertisers rose 60 percent. Porat also says that Google continue to close gap between mobile and desktop search monetization.
There are more 18- to-49-year olds on YouTube than there are consumers who watch cable TV, Porat said. “Advertisers want to reach these audiences, and our focus is on the opportunity to get larger budgets moved to YouTube,” she said.
Clearly YouTube is starting to contribute to the overall company and its mobile advertising is making strides. The company also said its mobile search business is getting stronger, and that search as a whole saw higher click pricing.